Selling the Upside Story on a Rent Controlled Community
SELLER: M West Holdings | UNIT COUNT: 60 | PRICE: $26,000,000 | EXPERTISE: Value Add & Rent Control
THG was engaged to exclusively represent a family office in the sale of a value-add 60 unit rent controlled apartment building in Santa Monica with incredibly low rents due to a roster of long-term tenants. The city’s reputation as a tenant-friendly city was a significant obstacle to maximizing value as investors would be conservative in their ability to improve their cash flow by renovating and raising rents to market levels.
THG crafted a business plan which:
Created a comprehensive rent survey showing the significant premiums luxury finishes were commanding in the market and the relative affordability to new construction in order to maximize investors’ market rent assumptions.
Highlighted the significant gap between post renovated rents and new construction rents which gave investors comfort that THG’s renovated rents were achievable.
Highlighted the Santa Monica market and it’s tremendous growth prospects which included a rapidly expanding tech sector, connectivity through the recently opened exposition line, and high barriers to entry which limit new construction but elevate demand for renovated luxury due to tenants not having a new construction option.
THG sourced a trophy apartment building investor who was willing to undertake THG’s business plan and ultimately closed at one of the highest prices per unit in Santa Monica.