Rescore, a real estate investment trust out of Boca Raton, Fla., has purchased 1.8 acres in Hollywood for $28 million and will partner with Brentwood developer Cal-Coast Development to build a $110 million apartment complex.
The partners plan to build roughly 300 apartments over about 18,000 square feet of office on three adjacent properties at the northwest corner of Cahuenga Boulevard and Fountain Avenue that the Florida trust, managed by private equity firm Encore Housing Opportunity Fund, also of Boca Raton, purchased last month.
The sellers, a group of nine owners – many of them family trusts – joined forces last year to market their properties jointly to take advantage of rising development demand.
The purchase comes as dozens of developers are digging in to deliver major construction projects in Hollywood, having committed nearly $4 billion to the construction of more than 25 ground-up projects and the renovation of at least 10 existing buildings. Just east of Rescore’s proposed project, for example, sits the four-acre site that West L.A. public real estate company Kilroy Realty Corp. purchased earlier this year from the Academy of Motion Pictures Arts and Sciences for $46 million. There, Kilroy has said it will build a $285 million mixed-use project totaling about 550,000 square feet.
The Rescore/Cal-Coast site sits a block south of popular Sunset Boulevard destinations such as Amoeba Music and ArcLight Cinemas Cinerama Dome.
Ed Miller, president and chief executive of Cal-Coast, said the companies don’t yet have a timeline for groundbreaking, but they don’t expect to be held up by zoning delays related to a controversial community plan that was thrown out by the City Council in April.
“We still have to process this through the city and through the community, so we’re really just in very initial stages,” he said.
Brokers Michael Albert and Henry Garcia of the Studio City office for KW Commercial represented both the buyer and the seller in the sale.
Albert said the final price tag – about $15.6 million an acre – might seem steep, but for the hot Hollywood market, it makes sense.
“You need solid (residential) rents to justify a price point like that, and you won’t get that in a lot of places in Los Angeles,” he said. “But in Hollywood, rents have really skyrocketed in the last few years.”
According to the annual USC Casden Multifamily Forecast released in September, the most recent data available, the average rent in the Hollywood/Silver Lake submarket was $1,453 a month in the second quarter last year, up 2.5 percent from the same period the previous year and 7.6 percent higher than in 2009. By comparison, the average countywide rent was $1,425.
Cal-Coast, which Miller founded in 1994, has developed all variety of housing in Los Angeles, from single family detached homes in master planned communities to senior housing to hotels. It worked on early plans for the 3.6-acre Wilshire La Brea residential complex, which it sold to San Francisco real estate investment trust BRE Properties Inc. prior to the start of construction.
Bob Israel, one of the sellers, said that developers have been eyeing the site for years, though interest had lately escalated. Now president of Brentwood theater production company Broadway & Vine, he founded Aspect Ratio, a movie advertising agency with offices on the site, in 1989. When he sold the business 10 years later, he retained a stake in the property.
“We’d gotten offers over the years, but we hadn’t seen the kind of numbers that we started getting in the past year,” he said. “We’ve seen Hollywood go from being a somewhat funky home for production companies to a highly desirable center for nightlife and tourism.”
Aside from pegging down entitlements, a fair amount of prep work will need to be done before construction can begin on the Rescore/Cal-Coast project. While much of the site is made up of parking lots, a couple of small houses and office buildings – including Aspect Ratio’s – will need to be demolished. The developer may also consider working with the city to vacate Homewood Avenue, a small east-west road that cuts midway through the site.
Plans for exactly what shape the apartment community will take are still up in the air, though Miller said his team plans to draw inspiration from the facades of some old Hollywood buildings that have been demolished over the years.
“We’re kicking around a lot of different ideas, but we feel strongly about doing something that’s not just a typical mixed-use apartment building,” he said. “We want one that reflects old Hollywood.”
In addition to paying homage to the area’s history, Miller said Rescore and Cal-Coast are committed to making their development a financially feasible home for Hollywood residents. Though rates have yet to be determined, they’re expected to come in well below those for units at the Camden, a 287-unit property on Vine Street by Houston developer Camden Property Trust. There, residents will pay between $2,000 and $4,000 a month.
“One of the things we’d really like to create there is an opportunity to provide rents more to the working person, as opposed to a lot of the high-rises up on Sunset and Vine, and on Hollywood Boulevard,” he said.