Lion Real Estate Group LLC has cashed in on the hottest trend in the local commercial real estate market.
The company has taken title of a 26-unit apartment building in Hollywood after buying two distressed loans the prior owner defaulted on.
Lion, a West L.A.-based real estate investor, took title to the 920 Wilcox Ave. property Jan. 10 after paying a total of $4.02 million for the loans from two unnamed lenders. Only a small portion of the loans had been paid by the previous owner, with the total principal of $7.2 million remaining, excluding accrued interest, said Lion co-principal Mory Barak.
While the trend of distressed debt purchases is an alarming sign of a slumping economy, Lion was founded in 2008 to buy these sorts of loans. "We got the loans at a discount," Barak said.
Previous owner Pacific Northstar Property Group LLC paid about $7.25 million for the building in 2007 and had planned to convert the apartment property into condos.
"They had a couple of condo conversion projects going simultaneously and obviously that market eroded," Barak said.
Pacific Northstar, based in Beverly Hills, could not be reached for comment. Its telephone number was disconnected.
The building is vacant and Lion will begin renovating the 29,000-square-foot property in March. Lion will spend about $50,000 on each unit and will reposition the builder as a higher-end "town home" property. The building has 25 two-bedroom units and one studio apartment, and is not subject to rent control.
Lion co-principal Jeff Weller said that the deal breaks down to about $140 per square foot, a favorable price compared with a similar building that sold in August 2008 for $315 per square foot.
"We think our building is superior in every way," he said. "After we took title, we ended up getting two offers for $700,000 more than what we paid for it."
Lion represented itself in-house on the deal.
An eight-unit apartment building in Westwood has changed hands for $409,375 per unit a robust price in the recessionary real estate market.
West L.A.-based Abraxis BioScience Inc., a biotech firm that makes the cancer drug Abraxane, purchased the building from an unnamed L.A.-based family trust. The $3.28 million deal for the 1251 Brockton Ave. building closed Dec. 18.
Abraxis could use the building for employee housing or simply maintain it as an investment property, said broker Clark Everitt of Investment Real Estate Associates, who represented the seller. "It's not their core business, but they'd like to place some of their holdings in real estate."
The 22-year-old English Tudor building, which includes six two- and two one-bedroom apartments, traded for the listed asking price, Everitt said. The building is fully occupied.
"We did have two full-price offers on the table," said Everitt, who noted the seller decided to go with the established biotech company.
Everitt said that the building is a turn-key property and doesn't need any renovations. He said the high price was driven by the fact it is in a desirable submarket and isn't restricted by L.A.'s rent control ordinance.
Everitt's brother, William Everitt, and James Bekker, both of Investment Real Estate Associates, also represented the seller. The buyer was represented by Paul Kenworthy of Charles Dunn Co.
The historic Hillview Hollywood apartment building, which once housed a speakeasy owned by Rudolph Valentino, has been put on the market.
The owner, a group of real estate investors based in Middleton, Wis., that uses the Historic Hollywood Hillview LLC name, is seeking $21.2 million for the 54-unit building at 6533 Hollywood Blvd. The property was listed Jan. 26.
The ownership group purchased the building in 2002 for $3.8 million, according to David Harrington, a Marcus & Millichap Real Estate Investment Services Inc. broker who has the listing.
Harrington said the ownership group spent a considerable amount of money upgrading the building, adding central heating and air conditioning, high-tech kitchens and valet parking. The property also includes about 10,000 square feet of retail space.
The building, which is 96 percent occupied, has 28 studios, and 13 one- and 13 two-bedroom units.
"A lot of people look at the pricing and say it is a high price," Harrington said. "We are going to be able to generate multiple offers on it."
Staff reporter Daniel Miller can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 263.
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