Cap Rates Hit New Lows on Westside

It seems to be the deal that everyone is talking about. Venice Beach Apartments, a fully occupied five-unit apartment complex, traded hands in Venice at an astounding .7% cap rate—the lowest cap rate on record in the nation, according to CoStar. Kimberly R. Stepp, principal with Stepp Commercial, represented the seller and the buyer in the deal. We sat down with Stepp to talk about the transaction and get her take on what this means for the Westside market.

GlobeSt.com: You recently completed the lowest cap rate for an apartment property ever, how did you justify it from a pricing standpoint?

Kimberly R. Stepp: Considering where Venice Beach properties are trading on a per-square-foot and per-unit basis, along with the facts that this asset is a mere 300 feet from Venice Beach and its rents were severely depressed, the pricing was justified. The sophisticated buyer also saw opportunity to add value immediately as he negotiated high dollar buyouts of two tenants after closing, so this acquisition worked out quite well for him.