The real estate downturn has had a particularly deadly effect on the Los Angeles condo market, zapping sales figures as buyers are unable to qualify for home loans.
But Atlanta real estate developer Radco Cos. figures it has a winning model for the Met, a 1,279-unit property in Woodland Hills that has been converted from rentals. The company has sold about 100 units since purchasing the 5555 Canoga Ave. complex in September 2007. And even this summer, when L.A. condo sales slowed to a trickle, seven condos in July and eight in August sold.
“Oh, my God, if you look at the reports, the next best project sells one or two (a month),” said Radco Chief Executive Norman Radow, who noted that so far in September seven more units have sold.
The company has been able to move units by pricing the condos at the low end of the market. For example, one-bedroom units are sold in the mid-$300,000s, with buyers putting 20 percent down for monthly mortgage payments from $1,550 to $1,700. Two bedroom units go in the low $400,000s, with monthly mortgages of $1,800 to $2,250. Radow said those figures make the property attractive to would-be renters.
“When the market corrected people began looking for the bottom, but I don’t think buyers are looking for the bottom; they are looking for value,” said Radow. “Is it a good value for you? Can you afford it?”
Radco typically buys distressed assets. It purchased the 17-building property adjacent to the Ventura (101) Freeway from Calabasas-based real estate developer and investor Troxler & Associates Inc., assuming $170 million in debt. Troxler had sold about 550 units at the property since purchasing it in 2005.
Radco has spent $3 million on exterior and interior improvements. The vast 35-acre project has higher-end features such as six tennis courts, two racquetball courts, four swimming pools and a clubhouse. Radow expects it to take three and a half years to sell the remaining units.
Koreatown deal
Los Angeles-based real estate investor Lion Real Estate Group LLC purchased an 18-unit apartment building in Koreatown this month for $3.1 million.
The deal with an unnamed Los-Angeles based real estate investor breaks down to $172,000 per unit.
Lion plans to spend about $12,000 to $15,000 per unit on renovations at the 724 S. Berendo St. property. The Sept. 15 deal made sense for Lion because the building is not protected by a rent control ordinance.
Mory Barak, a co-principal of Lion, said rents can be raised since they are 15 to 20 percent below market. There are four vacant units at the building, where rents range from about $995 to $1,495 per month. The building has a mix of studios and one- and two-bedroom units.
Barak said that the previous owner had not spent much money to maintain the 14-year-old building and “it looked pretty dated relative to its age.”
Jeff Weller of Lion said that planned upgrades for the units include new cabinetry and stainless steel appliances, among other amenities.
Lion was represented by Beverly Hills Realty Group.
Magical Conference
Former NBA superstar and current real estate mogul Earvin “Magic” Johnson has raised $1 billion for a new investment fund in the last year.
At last week’s annual ACG business conference Johnson told a packed house at the Beverly Hilton that his Los Angeles-based Canyon-Johnson Urban Fund LP, a private equity fund focused on urban investing, would be sitting on the money until it finds the right investment opportunities. Why? Because in turbulent times, “Cash is king.”
Johnson regaled the audience with tales from his early days as an investor, recounting a conversation he once had with Howard Schultz, chief executive of Starbucks Corp., when Johnson was seeking out franchise opportunities.
“I told Howard minorities will pay four dollars for a cup of coffee but minorities don’t like scones,” said Johnson, who is the only Starbucks franchisee with more than 100 stores nationwide. He developed the franchises through his Johnson Development Corp. starting in 1998.
“We put in sweet potato pie. We also took out the elevator music, because we don’t listen to that. We put in soft R & B; like Marvin Gaye and Smokey Robinson.”
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
