It’s not every day that large properties on Santa Monica’s Third Street Promenade become available.
Which is why Glendale’s American Realty Advisors was willing to shell out $96.3 million last month to acquire Criterion on the Promenade, a building at 312 Arizona Ave. with 30,000 square feet of retail space, 23,000 square feet of office space and 32 apartments.
And get this: The sellers, a joint venture between Santa Monica’s Metropolitan Pacific Capital and a fund managed by New York’s Clarion Partners, paid only $13.8 million to acquire the asset in 2010, which they renovated last year.
American Realty paid more than $1,800 a square foot – $300 above the average for mixed-use retail properties in Santa Monica, according to real estate information firm CoStar Group Inc. By comparison, the average for similar properties in the city of Los Angeles is only $350 a square foot.
The deal proves that, if you can hack it, it pays to acquire in prime locations such as Santa Monica’s shopping district during a downturn and make renovations in higher times.
The retail and office portions were fully leased at the time of sale. Major tenants include Victoria’s Secret; Brookstone; and WeWork, a provider of co-working space.
The sellers were represented by Christopher Hoffman and Rikki Keating of Eastdil Secured. No buyer broker was listed.
If you want to work with China’s wealthiest property investors, list a celebrity home in Los Angeles for a record price.
That advice might seem illogical, but such was the path for Sally Forster Jones, president of international luxury properties at John Aaroe Group’s Beverly Hills office.
While working at Coldwell Banker’s Beverly Hills office in 2011, Jones made international news by co-brokering one of the most high-profile deals in L.A. history: the sale of Candy Spelling’s mansion. The manor, built by the late TV producer Aaron Spelling, sold for $85 million to then-22-year-old billionaire heiress Petra Ecclestone. Originally listed at $150 million, it was the highest-price home in the United States at the time.
News of the deal reached China and was seen by Rupert Hoogewerf, editor in chief of Hurun Report, which publishes an annual list of the wealthiest people of Chinese origin. Hoogewerf asked Jones to speak on a panel at an event for the wealthiest people featured in the 2014 issue. She attended, eagerly, with a translator and was interviewed on stage. Then, she networked hard. She is still in touch and working with many of the Chinese families that were in attendance.
Jones said she has gained cultural insight from time spent in China, helping her communicate and negotiate.
“Chinese buyers prefer new properties,” she said. “In L.A., a new property means one that is less than 10 years old. In China, 10 years old is old. Things are developing so quickly (in China) that new means absolutely brand new.”
Back in Los Angeles, Jones added another “most expensive” sale to her portfolio just over a year ago. In late 2014, she represented one of the world’s youngest billionaires, Markus Persson, developer of videogame “Minecraft,” in his purchase of a $70 million home in the Trousdale section of Beverly Hills. It was the most expensive house ever sold in that city. Persson bought it with newly accrued riches: He had just sold his game to Microsoft Corp. to the tune of $2.5 billion.
“He’s a bachelor, and it was very suitable for that wow factor because it was a sexy property, so from the moment he walked in he was taken by it,” Jones told the Business Journal on the phone from Cabo San Lucas, Mexico, where she was vacationing with her family. “(Persson) saw it, loved it and wanted to buy it. We closed escrow six days later.”
San Francisco developer Carmel Partners bet smart in 2011 when it paid $40 million for the 365-unit Vida Hollywood Apartments at 1745-1750 N. Wilcox Ave. in Hollywood.
Carmel predicted property values would soar in the submarket as it emerged from its postrecession blues. The firm only completed light renovations and held on to the property for four years. It sold it a month before the new year for more than double what it paid, raking in a $48.5 million profit, not counting the cost of maintenance and those light renovations.
Chicago investment manager Waterton Associates paid Carmel $88.5 million for the property. It spent $165,000 a unit, which is roughly in line with average sale prices in the area.
Waterton plans to reposition the asset, which was 97 percent leased at the time of sale, through upgrades that cost roughly $15,000 a unit.
The 212 studio apartments at the property average 390 square feet. Those small spaces rent for roughly $1,600.
Mark Renard and Manfred Schaub of Cushman & Wakefield Inc. represented Carmel Partners in the building sale. Waterton represented itself.
Staff reporter Hannah Miet can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 228.
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