Student Housing
2500 Durant/2520 College
Transaction Highlights
2500 Durant: 40 residential units; 3 retail units; 32,121 sq. ft.
2520 College: 49 residential units; 36,817 sq. ft.
Use: Residential/Retail
Neighborhood: Berkeley, CA
  • Prado felt that both assets had been mismanaged by “mom & pop” ownership
  • Immediate opportunity to increase apartment rents due to high turnover from student tenants
  • Prado believed that the retail rents were below market on the 2500 Durant asset and there was an opportunity to improve the retail income and upgrade credit
  • Prado felt they could improve the renter experience at both buildings by exterior/interior painting, repointing brick, new carpeting, and signage improvements
  • On individual units, Prado saw an opportunity to convert one-bedrooms to two-bedrooms by simply adding a wall which resulted in an immediate pop in rents
  • Prado was able to secure Super Duper as the anchor tenant at 2500 Durant at a rent that was 45% above pro-forma underwriting
  • While Prado and Jonathan Rose would have liked to hold the assets in perpetuity, we evaluated marketplace in 2019 and decided that it was the appropriate time to sell for several reasons:
    – There were major legislative headwinds that could have had a profound impact on the ability to raise rents for rent-controlled units in Berkeley
    – Capitalization rates had compressed from our pro-forma of a 5.5% exit cap to 4.0%
    – There were concerns regarding the sustainability of the high retail rents on Telegraph due to deteriorating street conditions and the addition of retail at the Berkeley Student Union
  • Ultimately, a broker was hired, and the properties were widely marketed and sold to Goldman Sachs after a competitive bidding process

  • The NOI on 2500 Durant improved by 124.4% from acquisition and was 34.6% percent above pro-forma at disposition
  • The NOI on 2520 College improved by 76.0% from acquisition and was 32.1% percent above pro-forma at disposition
  • Prado refinanced the properties in 2015 and was able to return 69.9% of the original capital invested