Marlaw Apartments at 34-44 Stiles St. in Elizabeth — Courtesy: Berkadia
By Joshua Burd
The longtime owner of a 36-unit garden apartment building in Elizabeth has sold the property for $4.8 million, in a newly announced deal by Berkadia.
In a news release, the brokerage team said it represented two undisclosed parties in the transaction at 34-44 Stiles St. The buyer is now planning a series of upgrades at what’s known as Marlaw Apartments, which was 100 percent occupied at the time of the sale and benefits from its corner location and off-street parking.
“Value-add properties continue to drive the highest demand from the investment community,” Berkadia’s Nat Gambuzza said. “We had a tremendous amount of interest in this asset and our ability to convey the upside potential is what ultimately drove the value to a sub-5 percent cap rate.”
Gambuzza, a senior managing director, brokered the trade alongside Senior Director Trevor Fiebel, Director Tim Blashford and Associate Director Nick Balancia of Berkadia’s Morristown office. They said the deal was driven in part by the property’s below-market rents and other opportunities to capture upside.
The $4.8 million sale price translates to a 4.9 percent capitalization rate and a per-unit price of $133,333.
“Uniquely with this asset, we were able to identify major operational inefficiencies within the seller’s utility expenses,” Fiebel said. “We developed and marketed a strategic plan to update and convert the heating system from oil to gas which could take place immediately following closing. With our ability to market upside in both the expense reduction and increased revenue, we generated a tremendous amount of interest in this asset.”
Marlaw Apartments comprises one studio, 17 one-bedroom and 18 two-bedroom apartments.
“This property, held by long-term ownership, had rents that were 51 percent below market,” Blashford said. “The purchaser has a plan to freshen up the exterior, renovate the common areas and renovate units on turnover.”
