Mariposa Apartments
ANAHEIM, CA-Kennedy Wilson of Beverly Hills has sold its 286-unit Mariposa Apartments at 175-211 S. Rio Vista St. to an Orange County-based buyer for $43 million. The sale closed at a 4.8% cap rate on in-place income, according to partner Robin Ossenbeck of the West Los Angeles office of Hendricks & Partners, who represented Kennedy Wilson in the off-market transaction along with Hendricks & Partners SVP Shane Shafer.
The buyer, Patrick Cadigan, was represented by Carl Greenwood and Jim McKenzie, co-partners of Tustin-based Greenwood & McKenzie, a full-service real estate investment firm. Greenwood & McKenzie represents Cadigan and other investors it serves for property management, asset management, refinancings, 1031 exchanges and other services. With the closing of the Mariposa sale, it now represents Cadigan for 10 Orange County apartment complexes totaling 1,610 units.
Robert Hart, president of KW Multifamily Management Group, said that the Beverly Hills-based company "decided to sell the property based on the buyer’s highly attractive offer, which still enables him to take advantage of future rent growth.” The Mariposa, built in 1969, includes 174 one-bedroom and 112 two-bedroom apartments that average 846 square feet and rent for an average of $1,103. The complex, which was built in two phases and includes 48 structures on 11.5 acres, was 94% occupied at the time of sale. Its common area amenities include swimming pools, fitness centers and recreation areas.
Ossenbeck tells GlobeSt.com that the Mariposa sale illustrates a number of trends occurring in the Southern California apartment market, including falling cap rates. "We expect to see more sales this year with lower caps than in 2009 to 2010," she says. The Mariposa sale also reflects the rising volume of multifamily sales, according to Ossenbeck. Her analysis of apartment sales in L.A. County shows that, if trends for the first few months of this year continue throughout 2011—and if 2011 follows the traditional pattern of more sales closing in the latter part of the year—the L.A. market is on track this year to equal the more than $4 billion in sales volume of 2005, she said.
Mariposa Pool
According to Ossenbeck, the dollar volume of L.A. apartment sales fell below $4 billion in 2006, then rose again and peaked at more than $6 billion in 2007 before falling to the $1 billion range each year in 2008 and 2009, with the number of transactions dropping commensurately. Sales in 2010 totaled over $1.6 billion; for the first two months of this year, sales totaled more than $447 million. Although these figures are for L.A. County only, she says, the same trends are occurring throughout the rest of Southern California.
Sales volumes and prices are going back up again "due to the lack of multifamily product to purchase, declining interest rates from 2010, and investor demand with lots of capital chasing deals," Ossenbeck tells GlobeSt.com. In addition, she says that few if any complexes the size of Mariposa are on the market in Orange County. "I'm not sure if there is another 200-plus-unit property on the market there," she said.
The Mariposa represented an opportunity for the new owner to add value, Ossenbeck said. "The deal made sense to him because rental concessions have diminished and rental rates are expected to increase soon," she said. Deutsche Bank provided 10-year fixed-rate financing for the Mariposa transaction.
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