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.
Beacon is buying the 471,000-square-foot office tower near the intersection of Wilshire Boulevard and the 110 (Harbor) Freeway for about $245 a foot, the sources said.
Beacon has been hyperactive in the market recently, two weeks ago selling the 655,000-square-foot Trillium office complex in Woodland Hills for $162 million, or $260 a foot, to Douglas Emmett Realty Advisors Inc.
Three months ago the Boston-based firm agreed to sell Bank of America Plaza at 333 S. Hope St. to Trizec Properties Inc. for $435 million, or nearly $311 a foot a record price for downtown.
And in mid-October, Beacon agreed to buy the 607,349-square-foot Figueroa Plaza from Northridge Capital for about $133 million, or about $220 a foot.
Buying 1000 Wilshire gives Beacon a trophy downtown L.A. office building that's about 83 percent leased. Law firm Buchalter Nemer Fields & Younger has a 15-year lease for 83,000 square feet and Wedbush Morgan Securities has six years remaining on its lease for 113,000 square feet.
Jeremy Fletcher, a Beacon senior vice president, didn't return calls. Sumitomo was represented by Cushman & Wakefield Inc.'s David Hasbrouck, Richard Plummer and Anthony Gatti.
UnumProvident Corp., the large disability insurer, renewed its lease at Glendale's 655 N. Central Ave. in a deal worth about $23 million.
Though the Chattanooga, Tenn.-based company downsized its operations by nearly 20,000 square feet in the building, taking about 90,000 square feet for a 92-month term, UnumProvident will retain naming rights on the building.
The building's owner, Glendale Plaza Realty Holding Co., was represented by Trammell Crow Co.'s Brad Cox and Scott Crawshaw. UnumProvident was represented by Trammel Crow's Jonathan Larsen and CB Richard Ellis' Doug Marlow.
Larsen said the renewal is a victory for the Glendale market because the company was considering relocating to Pasadena, Burbank or downtown Los Angeles.
"It's significant we're keeping them in Glendale," he said. "For Glendale, it preserves the market from falling into an overabundance of space."
Westside real estate investor Kevin Green has listed a prominent Beverly Hills office building at 9440 Santa Monica Blvd. for about $35 million.
The 87,000-square foot building, located in the prime Golden Triangle market at the northeast corner of Santa Monica Boulevard and Beverly Drive, is mostly occupied by Bank of America, which last month renewed its lease for a 10-year term a deal worth about $15 million.
The Los Angeles County Tax Assessor listed a value of nearly $20.3 million for the property at its May 4, 2001 recording date.
Aside from its office space, the building also has about 28,000 square feet of retail stores on its ground floor.
Green has hired Bob Safai, a principal at Madison Partners, to market the property.
Staff reporter Andy Fixmer can be reached at (323) 549-5225, ext. 263, or at firstname.lastname@example.org .
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