A Hollywood apartment building east of the 101 Freeway changed hands rapidly this month in another sign of the health of the apartment market and perhaps signaling changing views of the traditionally less desirable area.
As the continuing credit crunch and rising foreclosures have increased the number of renters, apartment properties are becoming a more attractive investment.
Still, many brokers have long felt that Hollywood east of the freeway is less desirable, given its higher crime rates and the barrier the freeway creates with the community’s westerly center.
However, the $12 million sale of two-year-old East Village Hollywood at 5718-5728 Hollywood Blvd. indicates perceptions may be changing. The four-story, 100 percent-leased building was listed March 13 and sold April 15.
“The 101 is no longer a barrier to value in Hollywood,” said Martin McDermott of Grubb & Ellis Co., who represented both sides of the sale. “Usually freeways or mountain chains are artificial barriers, but we were in contract a week after listing with two backup offers.”
Empire Investments LLC, the entity of an unnamed Los Angeles-based real estate investor, purchased the 49,023-square-foot building from Maman Properties LLC and the Stewart Trust of Los Angeles. The 41 apartments were sold for an average of $292,683 per unit.
The building sits on more than a half-acre and includes 2,800 square feet of ground-floor retail space. Two retails tenants a restaurant, and a coffee and dessert shop are expected to move in within months.
The building is not subject to rent control, with one-bedroom units starting at $1,300 per month, two-bedroom units at $1,800 and three-bedroom units at $2,300, said Dana Brody of Grubb & Ellis, who also represented both sides of the deal.
The buyer purchased the property on a 1031 tax-deferred exchange basis.
Studio Sale
As it moves forward with the construction of two buildings at its Culver City studio, Sony Pictures Entertainment Inc. has sold off a production building across the street.
Gateway Equities LLC paid about $7.4 million for an 11,108-square-foot building at 10601 Washington Blvd. in a deal that closed March 20. Sony Pictures is leasing back the property for a year while Gateway advances its plans for the site.
Gateway is proposing to raze the existing two-story building and build a six-story, mixed-use development that would include offices, residences and ground-floor retail space.
The nearly 1-acre site is located within Los Angeles but not far from Culver City’s lively downtown area with its popular bars and restaurants. The deal breaks down to about $190 per square foot for the land.
Jackie Yashar, a senior associate with brokerage South Park Group Inc., said it would likely take between nine and 12 months for Gateway to secure the necessary entitlements.
“One of (Gateway’s) major factors in buying the property was its location on the border of Culver City and the city of Los Angeles,” said Yashar, who represented Gateway in the deal.
Jack Ravan is managing partner of Gateway and the president of South Park Group.
Cushman & Wakefield Inc.’s Carl Muhlstein and Geoffrey Garland represented the seller in the deal. Steve Ravan of South Park Group also represented the buyer.
New Player
Lion Real Estate Group LLC, a recently formed company hoping to capitalize on the downturn in commercial real estate, has been busy.
The Brentwood company was formed in October by Jeff Weller, formerly of CB Richard Ellis Group Inc., and Mory Barak, formerly of Buchanan Street Partners inc. In the last few months, the duo has closed a pair of multifamily deals.
In February, Lion Real Estate purchased a vacant apartment building at 417-421 Ocean Park Blvd. in Santa Monica for $3.2 million. The property is now fully occupied. Last month, the company paid $2.55 million for Villa Gramercy, a 12-unit rental property with below-market rents in the Hancock Park area.
Weller and Barak said both properties fit into their company’s strategy because they have “distressed” elements that allow for a bigger upside after improvements.
“It is a lot of fun to be in the market right now,” said Weller.
Barak said the firm will focus on deals that are too large for individual investors but too small to attract institutional buyers property in the $7 million-$10 million range.
The pair started the company with funding from high net worth individuals and families. Weller said that gives Lion Real Estate the chance to move quickly when a deal demands swift action.
“We closed all cash on both transactions,” he said. “We think we’ve got a competitive advantage due to having the ability to close all cash.”
Staff reporter Daniel Miller can be reached at
[email protected]
or (323) 549-5225, ext. 263.
