The owner of the Hollywood Palladium has reached a deal to sell the iconic music venue for $55 million, sources told the Business Journal.
Miami-based condo developer Crescent Heights is in escrow to buy the property at 6215 Sunset Blvd. from owner LSREF 2 Clover Property 4, a limited liability corporation controlled by Dallas’ Lone Star Funds.
The 58,822-square-foot music venue has hosted performers including Frank Sinatra, Jimi Hendrix and Jay-Z since it was built around 1940. Live Nation Entertainment Inc. has a 20-year lease for the venue through 2027.
The 3.5-acre property was listed in June. At the time, listing brokers John Tronson and Chris Bonbright at Avison Young Inc., and Jennifer Schwartzman at Newmark Grubb Knight Frank suggested that its 90,000-square-foot parking lot offered a development opportunity.
Crescent Heights, a national developer that primarily builds condo and apartment projects, has not announced its plans for the Palladium property and it did not return calls requesting comment. But the company is believed to want to develop a luxury apartment or condo tower at the site.
It is not clear whether the Palladium would be preserved, but its history and iconic nature may make it socially difficult to raze. However, the theater, which was extensively renovated in 2007, has no historic designation that would protect it from demolition.
Locally, Crescent Heights has developed the 232-condo-and-apartment Tara Village project in Tarzana and West Hollywood’s 40-condo Granville Tower. It owns the Century City property at 10000 Santa Monica Blvd., where it plans a 39-story apartment tower.
The possibility of building a new tower on the Hollywood property would explain the $55 million sale price tag. That equates to about $935 a square foot, which would be among the top sale prices per square foot for any L.A. building this year.
Apartments are among the hottest developments in Hollywood right now.
“As Hollywood attracts, retains and incubates tech, media and entertainment tenants, there’s growing demand for multifamily… by employees who want to be closer to their jobs,” said Arty Maharajh, senior research analyst at downtown office of brokerage Transwestern.
Indeed, only blocks away, developers Millennium Partners and Argent Ventures have plans to build two towers with 492 apartments next to the Capitol Records building on Vine Street and developer Bob Champion has plans to build two new apartment complexes totaling 470 units near Hollywood Boulevard.
The Palladium sale is expected to close by the end of the month.
Avison Young, Newmark and Lone Star did not return calls for comment.
An apartment complex in Simi Valley traded hands for $70 million this month in one of the largest multifamily sales in the county this year.
Miracle Mile real estate investment company Decron Properties Corp. bought the 397-unit property at 1518 Patricia Ave. from AIMCO Holdings LP, a Denver-based apartment developer.
The 16-acre property, known as the Creekside Apartments, was built in the mid-1980s as a garden-style complex of two-story walkup buildings comprising one-, two- and three-bedroom units.
Decron acquired the complex with a plan to upgrade the property and increase rents on all the units, including about 20 percent of them that had been reserved as affordable housing through a bond taken out in the 1990s. The affordable housing provision expires next year and would allow the company to offer them at market rate.
“Rents are on the rise in the area, and with our planned upgrades, we see a very conservative risk profile here given that we’re really just going after what the market is already getting,” said David J. Nagel, chief executive of Decron.
Average monthly rents now range from $1,050 to $1,895 in the market-rate units and are about $500 in the affordable units. It plans to increase rents in all units to more than $1,600 a month.
Decron plans to invest $9 million to upgrade the property next summer. It will add new flooring, cabinetry, and washers and dryers to the units. The developer also plans to redesign the landscaping, two swimming pool areas and the front entryway. It will expand an existing leasing center to include a coffee lounge and recreation center.
The acquisition is part of a 1031 exchange, which allows an investor to avoid paying capital gains taxes if it purchases a similar building within six months of a sale.
Decron sold a 205-unit apartment complex in Marina del Rey called the Bay Club Apartments to Archstone Communities LLC earlier this month for $44 million to facilitate the exchange.
This is the company’s third deal this year, bringing its portfolio to 53,000 units across California.
Staff reporter Jacquelyn Ryan can be reached at email@example.com or (323) 549-5225, ext. 228.