AB 1482 for
Built in 1987, the building clears the Los Angeles Rent Stabilization Ordinance cutoff of October 1, 1978. LARSO does not apply. I know this is pretty obvious for most sophisticated investors but i've been shocked when I have talked to brokers that have no idea about what AB 1482 is.
AB 1482, the statewide Tenant Protection Act, does apply. Annual rent increases are capped at 5% plus local CPI, with a hard ceiling of 10%. Just cause for eviction requirements attach after 12 months of tenancy.
What an Operator Sees
Investors continue to buy the AB1482 buildings. Buyers like AB 1482 better than RSO where it limits rent increases and policies that are anti-landlord. An 11.87 GRM and a 5% cap rate feel average to me. The rents have upside and I think the buyer can get to a 6% cap over time.
When Brentwood trades around similar multiples, I'd rather own Brentwood all day long.
This sale tells me there are investors willing to accept a 5% cap going in and that's why I tracked this deal not because I agree with the price, but because it tell me where the market is willing to write a check for AB 1482.
At this stage of the market with policies that keep affecting RSO buildings, I'm primarily interested in post 1979 buildings.
If you have AB1482 Buildings, Send Oms to David@AtlasBrief.LA