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8/26/15
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A private investor paid $11.25 mil for a two-property multifamily portfolio totaling 62 units ($181.5k/unit) in the San Fernando Valley. The properties are located at at 6115 Whitsett Ave in North Hollywood and 13019 Oxnard St in Van Nuys, within a mile of each other.
“The buildings traded at a very high GRM [Gross Rent Multiplier], but assets of this size do not come on the market often, and both these properties offered a substantial rental upside, making them very attractive for our buyer,” said Warren Berzack of Lee & Associates-LA North/Ventura. Berzack and Lee colleague Stephen Geiger represented both parties in the transaction.
The GRM for the Whitsett property was 13.4 and for the Oxnard property it was 13.72. That compares with an average GRM of 12.1 percent for the San Fernando Valley overall as of the second half of 2015. GRM, a measure of investment performance calculated by dividing the sale price by the gross rental income of a property, is one of the measures used to compare alternative assets. While the GRM for these assets was higher than the average for comparable properties, both buildings also offered a rental upside of about 20 percent, allowing the buyer to increase rents significantly and ultimately decrease the GRM as a result.
The buyer owns 1,800 apartment units with 1,000 of those units in very close proximity to the Whitsett and Oxnard buildings, allowing for economies of scale in managing the portfolio. The seller of the properties, also a private investor, made the decision to divest the property following the death of the principal owners.
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