Challenge
Located in the heart of Rampart Village in Los Angeles, the 66 unit apartment building was built in 1964 and was undergoing soft-story retrofit. After owning 245 South Reno Street for over 25 years, the seller wanted to exchange out of the rental property due to California’s rent control legislation effecting landlords, creating uncertainty of future rent growth and capping rent increases. The seller was looking to exchange out of California and into a triple net lease property to maintain or increase cash flow while eliminating property management responsibilities.

 

Strategy
The Matthews™ agent utilized the industry-leading marketing platform, Matthews™ Integrated Real Estate Management System (IREMS), and the proprietary database to generate 12 offers, creating a competitive environment around the opportunity. Matthews™ was able to identify an interested buyer who wanted to acquire a well-maintained apartment building in a good location for cash flow and appreciation over time. The buyer owns over 40 buildings in Los Angeles, establishing their familiarity with tenant mix, expense-savings, and increased net operating income strategies. The agent was also able to connect the seller with a Specialized Matthews™ Net Lease Agent to handle their exchange to a Safeway in Lake Havasu, backed by a corporate guaranteed lease.

 

Results
While in escrow, the COVID-19 pandemic disrupted, creating a few hurdles for Matthews™. However, the problems caused by the pandemic did not prevent them from achieving the sale and exceeding expectations. Ultimately, after marketing the property for sale, the previous offer was exceeded by $700,000 for a final sale price of $11.24 million, earning a record price per square foot. Both the buyer and seller found a mutually beneficial conclusion.