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(To read more on the multifamily market, click here.)

LAS VEGAS-A local brokerage firm has sold approximately 400 units in two apartment properties here for just under $50 million. Both properties sold at capitalization rates in the mid- to high 5% range.

On behalf of Chartered Development, Bentley Group Real Estate Advisors sold the Willows at Town Center Apartments for $29 million. Still in lease-up, the new 188-unit property at 9145 Bath Dr. in Northwest Las Vegas was 85% occupied at close of sale.

The new owner is Northwestern Mutual Life Insurance Co., which has hired Alliance Residential Co. to manage the property. The sale price translates to $154,266 per unit, which Bentley Group principal Chris Bentley tells GlobeSt.com is the highest per-sf price paid for an apartment property in Las Vegas.

The property is mapped for an easy conversion to condominiums but the buyer plans to operate it as an apartment property. The average monthly rental rate is in the $1.20s per sf. Bentley describes the investment as a cash flow deal with an in-place cap rate of about 5.5%.

On behalf of Hamilton Zane & Co., Bentley sold the 240-unit Villas at Painted Desert Apartments at 2851 South Decatur Blvd. for $20.4 million. The new owner of the class B apartment property is the Varva family, which was completing an IRS 1031 exchange. The Varva family assumed a $9-million loan on the property and put up the remainder in cash. Mainly due to the financing, which can’t be paid off for two years, the capitalization rate on the investment is 5.9%, Bentley says.

The recent trend in the Las Vegas multifamily market has been the rise and fall of the condo conversion activity. Since 2003, 81 apartment properties accounting for over 21,000 units have been taken off the market, causing a steady drop in vacancy rates. In response, over the past five quarters, permits have been issued for more than 10,000 multifamily units. Deliveries during the same period have totaled just 2,000 units, however, while Vegas’ well-known population growth has continued, causing rents to rise rapidly.

In October, Hendricks & Partners reported that the apartment operations market in Las Vegas has slowed from one of rapid rent growth to one of steady rent growth. “It would not be unheard of to see annual 3% to 5% average rental growth rates over the next five years,” states the report.

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