East Coast Real Estate Firm Finds Value in Pasadena

Real Estate
by Danny King

SSR Realty Investors Inc. got in while the getting was good. The White Plains, N.Y.-based real estate investment firm bought the recently completed Arpeggio apartment complex in Pasadena for $25.3 million. The 135-unit development, which is located at 325 Cordova St., is about 12 percent occupied.

"The property is one of the few remaining infill sites in the center of Pasadena," said John Basile, senior asset manager at SSR, which is subsidiary of MetLife. While SSR manages $5 billion in assets worldwide, Arpeggio is the firm's first foray into Pasadena.

It also may have been a relatively inexpensive one.

The deal was the result of a presale agreement SSR entered into with developer SNK Peabody Pasadena LLC during the second quarter of 2000. Because the sale of the property was to take place shortly after building completion but before the property was leased up, SSR paid $187,000 per unit, or about $157 per rentable square foot, a bargain according to Dean Zander, associate partner at Hendricks & Partners.

"You could make a case for this property being worth $200,000 or more for each unit at 90 percent occupancy," said Zander.

Rents at Arpeggio range from $1,420 a month for one-bedroom apartments to $2,550 for two-bedroom units, excluding the 12 low-income units in the complex.

Try, Try Again

The second time turned out to be a charm for the Los Angeles Unified School District.

The LAUSD purchased a 14.4-acre Van Nuys site for $12.9 million, with plans to construct a 67-classroom middle school. The property, at the southeast corner of Roscoe Boulevard and Noble Avenue, was once the site of the Van Nuys Drive-In Theater.

The deal ends a three-year process involving two sets of owners and lengthy litigation. When LAUSD, which has power of eminent domain, first identified the property as a potential school site in 1998, its request to test the soil for toxic substances was denied by CarMax Auto Superstores Inc., the property owner at the time.

"CarMax had really been resistant to let us do a soil investigation," said Roderick Hamilton, consulting senior facilities executive for LAUSD. "We went to court at least three times to get access."

While the district gained limited access to the site through litigation, it did not get full access until Herbert and Jane Boeckmann, owners of nearby Galpin Ford, bought the site from CarMax in mid-2000 for car storage purposes. It has since been determined that no remediation is necessary.

The school is scheduled for completion in 2004. It will accommodate 1,620 students as a two-semester school, and about 2,300 students if it goes to a year-round program.

Grubb & Ellis Co.'s Brad Wilson represented LAUSD while the Boeckmanns represented themselves.

Logjam Unjammed

The wait is over for one Hancock Park development.

L.A.-based Kor Realty Group is set to break ground on a 121-unit apartment complex at Rossmore and Rosewood avenues on July 1, following a two-year entitlement process lengthened by opposition from neighbors on either side of the project. Late changes to the development plan seemed to do the trick.

"We sat down with the neighbors and, with the help of (4th District Councilman) Tom LaBonge, come up with an equitable agreement," said Gregory Schem, president of Kor.

Neighbors to the west had complained that plans to put driveways on Rosewood, which runs along the north of the 1.25-acre property, would dump too many cars on the narrow residential street. Meanwhile, across the street, the owner of El Royale Apartments first contested the development because of traffic issues, then later asked for a larger setback from Rossmore for the 150,000-square-foot structure.

Kor pulled one of the driveways off Rosewood and put it on Rossmore, and moved the building back about 10 feet from its original siting.

Seeking Steam

One Studio City-based investor decided to include a little history in his first foray to the Mid-Wilshire Area.

Jeffrey Fish, who owns four Hollywood properties and two in the San Fernando Valley, purchased four buildings in the area totaling 158,000 square feet. The combined price of the purchases was about $8 million.

"We felt the steam was coming out of Hollywood as far as purchase price, and were looking to invest in an area that's improving," said Fish, managing member of JMF Development LLC.

While two of the properties are apartments, the third was the Granada office building at 672 S. Lafayette Park Place, which was added to the National Register of Historic Places in 1986.

Originally built as live-work loft space in 1927, it was converted into office units in the late 1980s. The 58,000-square-foot building is about 85 percent occupied.

The four properties were purchased within the past two months from four different family-owned entities. The Granada's seller, I & J Partnership, had owned the building for about eight years.

Fish hopes to continue attracting a wide range of tenants for the building, which includes designers, small production companies and attorneys. Rents range from $1.15 to $1.30 a foot.

Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at dking@labusinessjournal.com.

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