Quietly but steadily, Elkor Realty Corp. has been expanding its Los Angeles-area apartment portfolio in recent months, with purchases of complexes in Hollywood and Marina del Rey and several others pending.
The Chicago-based apartment owner/rehabber has amassed about 25 buildings in infill locations in L.A., several of which are under renovation currently. It also has pending ground-up development deals in Pacific Palisades, Pasadena, West Hollywood and Westwood.
"Typically, we buy B- and C-quality buildings and turn them up a notch, and try to bring a high level of design to the rehab so it's more than a 1960s' box and there's a real feeling of place," said Gregory Schem, managing partner with Elkor in L.A. Among the new design flourishes in Elkor's rehabs are terrazzo floors, stylish lighting and reupholstered vintage couches in the lobby.
Elkor's latest purchase is the historical 96-unit Ravenswood Apartments at 570 Rossmore Ave. near the Wilshire Country Club, for $10.3 million (brokered by Karoline Sauls of Sperry Van Ness). Schem said the plan is to "continue the renovation the prior owner started. It needs an upgrade inside and outside."
Built in the 1920s, the seven-story Art Deco building was home to a series of well-known tenants, including Mae West, the late Dodgers owner Walter O'Malley and Clark Gable.
"It's really a classic-designed building," Schem said. "We can do a lot more to bring back attention to the historical architectural treatments."
One of the areas where Elkor has been most active lately is Hollywood. The company has bought 15 to 20 buildings there in the past year, including several on Hillside Avenue that are being renovated and another at 1201 N. Crescent Heights, where the upgrade is almost complete.
Elkor also has branched out from apartments in its L.A. portfolio. It developed the 88-room Avalon Hotel, which opened a year ago in Beverly Hills, and last week completed the remake of the former Beverly House Hotel, now renamed Maison 140, a 48-room boutique hotel across from the Peninsula.
Elkor is under contract to purchase several other boutique hotels, in Santa Barbara, Santa Monica and Palm Springs.
"They're hotels that need renovation but are in strong markets," Schem said.
Elkor's other non-apartment purchase locally in recent months is the Boat Yard in Marina del Rey, where it is bringing in new specialty retailers to supply the boating community. A 10,000-square-foot building for West Marine, a boating-supply company, is under construction.
"We're trying to bring a high level of service and design sophistication," said Schem, who also happens to be a boating enthusiast. "I really think there's an opportunity to do this not only here but around the country."
Elkor also owns 113 slips at Marina del Rey, and it bought the four-building Villa Venetia apartment complex in the marina last year. It may pursue a renovation after it completes ground-lease negotiations with the county.
When will Playa Vista's commercial development ever become a reality? That component has been bogged down by one problem after another, including DreamWorks SKG's decision a year ago to fly the coop.
The latest setback stems from arbitration that began a couple weeks ago, but has now been postponed until October because the parties had scheduled an insufficient block of time for the highly complex, private proceeding.
Developer Robert Maguire and Playa Capital Co. entered into arbitration in part to resolve Maguire's rights regarding parcels that are up for sale in Playa Vista's commercial portion.
Maguire, who has a minority interest in the property and is spearheading development of the office and retail components, contends he has the right to buy any parcel up for sale as long as he can match any competing offer. Cushman Realty Corp. has been marketing a 6.5-acre parcel designated for office space, and Tishman Speyer Properties, Legacy Partners and Hines are said to be aggressively going after it. But brokers will have a hard time closing a sales deal before the arbitration is complete.
Spokespeople for Maguire and Playa Capital had no comment.
CB Richard Ellis Strategic Partners LP has purchased 505 N. Brand Blvd. in Glendale for $55 million from Shuwa Corp.
The 315,000-square-foot office building is about 40 percent vacant, including sublease space, which obviously represents an opportunity for the new owner to increase cash flow.
"The best news about the project is, there's available space for lease," said Bill Boyd, senior vice president at Grubb & Ellis Co. "505 Brand is the only opportunity for large tenants to consider."
Boyd predicted the 13-year-old building will lease at rates higher than it has ever achieved, in excess of $30 per square foot per year.
After the onset of the Asian financial crisis, Shuwa about two years ago placed its 8.5 million-square-foot portfolio on the market, including the Glendale building, Arco Plaza and towers in Century City and the Miracle Mile. But instead of proceeding with the portfolio sale, Shuwa instead has been selling certain properties individually.
Mary Ricks of Kennedy-Wilson Inc., who represented Shuwa, had no comment.
About 2.3 million square feet of industrial property in Los Angeles County is about to change hands as part of Pacific Gulf Properties' portfolio sale to a joint venture of the California Public Employees Retirement System and RREEF Funds.
Pacific Gulf announced last week that it entered into a definitive agreement to sell its properties for $929 million to CalWest Industrial Properties LLC, the CalPERS-RREEF venture.
The portfolio encompasses 15 million square feet of business parks in California, Washington, Nevada, Arizona and Oregon, housing 2,300 small businesses. The L.A. County portion includes properties in Baldwin Park, the City of Industry, Downey, Montebello, Chatsworth, La Mirada, Cerritos, Signal Hill and Whittier.
The sale is still subject to approval by Pacific Gulf's shareholders. Newport Beach-based Pacific Gulf is also marketing its multifamily properties.
Elizabeth Hayes can be reached at (323) 549-5225, ext. 229, or at firstname.lastname@example.org.
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