INSIDE THE DEAL: Winner of Bidding War Goes To… Affordable Developer in $7.3M Deal Brokered by Hendricks and Partners
- Mar 24, 2009
By Keat Foong, Executive EditorBurbank, Calif.—Sometimes, a seller is fortunate to find an affordable housing developer. That was the case in the sale of Verdugo Gardens, brokered by Hendricks and Partners. The 34-unit apartment community was sold for $7,262,500, at a 4.65 percent cap rate (with in place rents), or $246.56 per square foot. All in all, a relatively high price even in the second half of last year. The seller was Jamco Holdings Corp. of Los Angeles, which was seeking to execute a 1031 exchange, by selling this property and buying another. The buyer was Burbank Housing Corp. of Burbank, Calif., a non-profit group which was to provide affordable housing and upgrade the building. According to Kevin Lutz, associate partner at the Pasadena, Calif. office of Hendricks and Partners, which represented the seller, the buyer has an arrangement with the city of Burbank to find buildings that it can purchase and convert into affordable housing. The city is providing 100 percent financing for the acquisition, rehabilitation and relocation payments to existing tenants. The loan has a 55-year amortization at 3 percent interest, says Lutz. The property is located at 275 West Verdugo Avenue in Burbank. The buyer already owns a number of properties on that street, including another property next door, says Lutz. The market is a middle-income area with affordable housing needs, says Lutz. The average market vacancy was about 3 percent at the time of the contract, he says. “There was a lot of interest in the property between May and August. There were multiple offers,” says Lutz. Apparently, the affordable housing developer was the one to win the bidding war.