A three-building, 97-unit apartment portfolio in Beverly Hills sold for $27.9 million last month.
A joint venture between L.A. multifamily property owner Xenon Investment Corp. and private real estate investor L.A. Housing Solutions purchased the portfolio from a local family, whose grandfather built the three buildings in the 1960s.
The portfolio includes a 29-unit property at 330 N. Crescent Drive, a 44-unit property at 350 N. Crescent – both steps from Beverly Hills’ Golden Triangle shopping district – and a 24-unit property at 415 N. Oakhurst Drive, near the Four Seasons Hotel.
Given their prime locations, the Class B buildings sold for a top-of-market price of roughly $288,000 per unit, or $249 a square foot, after a bidding war between 30 companies, according to CBRE Group Inc. Century City Executive Vice President Laurie Lustig-Bower.
“It was a bit of a head spin with all the activity these buildings attracted because of their phenomenal location,” said Lustig-Bower, who represented both sides of the deal.
The joint venture is going to renovate the properties that are in need of maintenance and updating, partly the reason the family decided to sell.
“They felt that at this point nobody in the family really had the time to spend managing the buildings,” she said. “Everybody has different careers and felt that it would be better suited for somebody else who could continue running the buildings.”
The properties are nearly 100 percent occupied and have units ranging from one to three bedrooms. Monthly rental rates range from $1,250 to $3,200.
Chevy Chase, Md.-based CapitalSource Bank provided $16.8 million loan for the purchase.
Don’t expect the local office market to improve anytime soon, a report from USC’s Lusk Center for Real Estate concludes.
The report, released last week, projects a decline in Class A and B office asking rents of 7.7 percent and 7.3 percent, respectively, over the next two years despite fewer vacancies in most submarkets.
The annual study, known as the Casden California Industrial and Office Forecast, analyzed data such as job growth and industry trends to forecast the office and industrial real estate markets in Los Angeles, Orange and Inland Empire counties.
It found that 11 of 17 regional office submarkets have seen vacancies fall over the past year. L.A.’s vacancy rate declined almost a half-point to 16.6 percent. But even that isn’t expected to be enough to boost future asking rents.
In Los Angeles, Class A monthly asking rents fell 2.3 percent to $2.94 a square foot over the last 12 months and are expected to continue to drop over the next two years. Class B rose 1 percent to $2.17 but are expected to fall, too.
Senior researcher Tracey Seslen, who wrote the report, said that’s not surprising with the vacancy rate still high. She noted that while Los Angeles County’s unemployment rate recently fell a bit, it’s still very high at 11.9 percent as corporations have learned to make do with fewer employees. That means even growing companies are signing leases for smaller spaces than in the past.
“At the end of the day, there’s going to need to be even more hiring than there were jobs lost in order to get back to the amount of space that was required precrisis,” she said. “We don’t need as much space per worker as we did in the past.”
West L.A.’s Hudson Pacific Properties Inc. has issued a prospectus required due to a loan taken by the company’s president, Howard Stern, from New York’s Morgan Stanley Smith Barney LLC. Stern used his company partnership units as collateral for the personal loan.
The bank, which issued the loan last year, requires that Hudson Pacific submit a prospectus every quarter as part of the agreement to ensure that it has the option of cashing in on Stern’s shares should he ever default, according to a company spokesman.
It’s not clear how much Stern borrowed, but he put up all of his 216,949 partnership units and a portion of his shares for the loan. He holds about 0.9 percent of the shares.
The prospectus lists 10.3 million
shares of common stock already issued and the possible issuance of 2.6 million shares outstanding offered in exchange for units of partnership interest in the company, per Stern’s agreement.
The prospectus was filed with the Securities & Exchange Commission on Dec. 7.
Hudson Pacific’s major stockholders include Farallon Capital Partners and Farallon Capital Institutional Partners, Chief Executive Victor Coleman, Stern, Morgan Stanley Smith Barney and Glenborough Fund.
Staff reporter Jacquelyn Ryan can be reached at email@example.com or at (323) 549-5225, ext. 228.