LOS ANGELES—Off market may be the best bet for value-add multifamily deals at this point in the cycle. A 21-unit multifamily property on three contiguous lots totaling a half-acre has just traded hands between two unnamed private investors in an off-market transaction. Although the property did not come to market, the sales team still received multiple back-up offers for the sale.
“It is extremely rare for us to see available inventory In Hancock Park, especially with volume attached to It. It is a rare commodity to find any sort of larger assets for contiguous lot play for that matter,” Zac Freehling, a broker at Pacific Partners Real Estate Investments, tells GlobeSt.com. “When we were able to solidify a contract on this particular project, there were a number of back-up offers from competing buyers.” Freehling represented the seller and buyer in the transaction, along with his colleague Jason Shenitzer.
The R4-zoned property is located at 535-553 N. Rossmore Ave., the main thoroughfare of Hancock Park, and traded hands for $11.3 million or $539,000 per unit, which Freehling says is at the high end of the market for this type of property. “With the R4 zoning, the buyer could build a number of units on the property, or he could refurbish the existing assets, which are some really beautiful 1930s character properties, and just sort of breath new life into the property,” he adds. The units have really great charm and curb appeal; they just need some TLC.”
The buyer owns a number of other units in the area and submitted an unsolicited offer to buy this property. Although Freehling wasn’t clew about his exact plans, he said the buyer will either develop mid-use apartments on the site or redevelop the property. “This is going to be a significant infusion of capital because if 4 is a basic repositioning play, the systems are older and outdated and need to be brought into tie next century,” explains Freehling ‘If it is development play, he’ll want to maximize the amount of units he’ll be able to build on the lot. Either way, this is going to be a significant piece of property.”
Other value-add buyers have also had success finding off-market deals. TruAmerica Multifamily, for example typically works off-market and leverages its relationships to find deals. In a recent transaction, which was on-market_ the investors past relationship with the seller helped win them the deal.