Lowest Cape Rate
Colliers Claims Lowest Capitalization Rate in Past Five Years
A 13-unit apartment building in San Francisco has been sold to a Hillsborough investment partnership in a transaction valued at $2.7 million and, in the process, has achieved something no other multi-family sale has managed to do for the past five years – achieve the lowest capitalization rate for a 10-unit or larger building, Colliers International has reported.
Located at 1535 Leavenworth Street on Nob Hill, the 1907-era building, which is fully occupied, sold for $322 per square foot, or $207,692 per unit, at a cap rate of 1.97 percent, according to Colliers’ Payam Nejad, who represented Adak Investors, a Pacifica, California-based investment firm, in the sale. Ali Khostovan with Capitol Investments represented the buyers.
“There was 133% upside in the rents,” said Nejad. “The trapped equity due to rent control will prove to make this a great investment once the units eventually turn.”
The historic three-story property itself consists of seven 1-bedroom/1 bath, two 2 bedroom/2 bath, one 3 bedroom/2 bath units and one parking space. It totals 8,376 square feet. It will continue to be part of a larger investment portfolio held by the partnership.