Not long ago, developers took what were considered huge risks to build housing in downtown Los Angeles. Now, institutional investors are willing to pay huge sums for those pioneering projects, and some of the developers are preparing to sell.
The owner of the 322-unit Pegasus Apartments has retained Eastdil Realty Co. to sell the building, which could fetch $80 million if the price matches those recently paid for other downtown residential properties.
Meanwhile, developer Mark Weinstein's MJW Investments Inc. hired Marcus & Millichap to market the converted Fashion District warehouses it transformed into a retail/housing complex dubbed Santee Court. The 165-unit mixed-use center could command close to $45 million.
MJW is also close to selling 824 S. Los Angeles St., a building slated for conversion, for more than to $120 a foot, or close to $5 million nearly four times what his company paid for the property two years ago.
Weinstein is developing the 23.5-acre Sears site in Boyle Heights into a mixed-use project as well. So far, his company has spent $20 million amassing the property, planning and designing the project, Weinstein said.
Elsewhere, San Francisco-based Martin Co. has hired CB Richard Ellis Inc. to sell its 46-unit apartment building at 818 Grand Ave. Sources said the building could trade for much more than $400,000 a unit, or upwards of $20 million.
Bids for high-end downtown apartment buildings are typically in the $250,000-per-unit range, Weinstein said. "It's a really hot market," he said. "Institutional buyers are looking at everything, but apartments are getting the highest prices of all."
Kor Group Inc., which owns the largest stake in the Pegasus, sold its recently-completed 121-unit Marlowe apartment building in Hancock Park for about $52 million, or nearly $345,000 a unit, to an affiliate of SSR Realty Advisors Inc.
Tyson Sayles, the company's senior vice president of acquisitions, wouldn't comment on the Pegasus offering but said the outlook is good for multi-family residential buildings.
"It's a very strong market for apartments," he said. "The fundamentals are sound, interest rates are low and investors have a large appetite for Southern California apartment buildings." Other investors in the Pegasus include Beverly Hills-based Kennedy Wilson Inc. and Chevron TCI Inc., which isn't selling its stake in the building.
Beacon Strikes Again
Also attracting a high price last week was 1000 Wilshire, which Beacon Capital Partners agreed to buy from Sumitomo Life Realty Inc. for $115.4 million, according to sources close to the deal.
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