Colony Capital LLC, the Los Angeles-based private equity firm that bought four Las Vegas casinos last year for $1.2 billion, has agreed to pay $305 million for the Water Terrace apartments in Marina del Rey.

Principal John Brady said Colony would spend another $35 million to renovate and convert the property into condominiums which could be ready by mid-year.

Brady said though the building’s units are leased, the complex was built for condominiums and a tract map is already in place.

“We will undertake a major renovation of the common areas,” Brady said. “There is an opportunity to take it to a five star level.”

Colony secured $290 million of financing from AIG Global Investment Group and will use $50 million of equity from its Colony Investors VI Fund.

After the sale of the property closes later this month, Brady said Colony would re-brand and rename the property as part of its repositioning strategy. Colony purchased the waterfront 18-story, 450-unit luxury high rise from Sam Zell’s Equity Residential.

The complex which opened in 2003 was built by a partnership of Lincoln Property Co. and Equity Residential, which bought out its partner eight months ago.

Colony purchased the 3,000-room Las Vegas Hilton from Park Place Entertainment Corp. for $280 million in late 2003, then struck a $1.24 billion deal last year with Harrah’s Entertainment and Caesars Entertainment for four Las Vegas casino hotels.

Since starting in 1991, Colony Capital has invested approximately $12 billion in more than 7,500 assets through various corporate, portfolio and property transactions.

Brady said the Water Terrace deal is a rare chance for Colony to invest in its hometown. “We haven’t had the opportunity to invest in superb luxury assets in our own backyard,” he said. “We are an opportunistic fund and we have to feel we’re buying property inexpensively or there is a real opportunity to create value. Those are very difficult to find in Los Angeles.”