INSIDE THE DEAL: Sale Takes Place Amid Already-Tight Credit Conditions

By Keat Foong, Executive Editor San Carlos, Calif.—Although it closed before the financial crisis further worsened in September, the investment sale of the 42-unit Laurel Theatre Apartments brokered by Marcus & Millichap Real Estate Investment Services was already taking place in an environment of scarcer credit.The seller, Laurel Theater Apartments LLC, “wanted a strong buyer in this market because loans are very difficult to obtain,” said Tom Doglio, vice president investments and director of Marcus & Millichap’s National Multi-Housing Group in Palo Alto, Calif. Twenty-plus offers were received from investors all over the Bay Area and Northern Califorinia, said Doglio. The seller took one of the highest bids, from “a very strong buyer with a track record,” said Doglio, who represented the seller. He also represented the buyer, D&D Laurel Theater Apartments LLC. The acquisition was financed by a securitized loan from Goldman Sachs which needed a proven buyer for it to agree to accept the application, Dolio indicated. The property has excellent prospects for long-term appreciation, said Doglio. It is “one of the nicest apartment complexes in San Carlos that always had a high rate of occupancy and one of the highest rents in town,” he said. The seller intended to redeploy the profits to invest in more apartments. The eight-year-old Laurel Theater Apartments is located at 1500 Laurel Street, only one block from Trader Joe’s and Walgreens and near White Oaks single-family neighborhood. It is about 25 miles south of San Francisco, and 25 miles north of San Jose, said Doglio. Some units include washer/dryer hookups, and 17 units include washers and dryers. “In San Carlos, this is the newest, nicest apartment complex in town,” said Doglio.