Hollywood-based developer Schon | Tepler Partners sold two buildings April 7 in Echo Park and Historic Filipinotown to a state program known as Project Homekey. The apartment complexes sold for a combined $29.8 million.
The residential complex at 2812 W. Temple St. in Echo Park totaled 43 units and sold for $18.6 million, or $432,000 per unit. The apartment building at 916 N. Alvarado St. in Filipinotown with 28 units sold for $11.2 million, or $401,000 per unit.
Both buildings were purchased by the Housing Authority of the City of Los Angeles, which uses state funds to house the homeless through Project Homekey. The deal was done directly between both parties — there were no brokers involved in the transaction.
“They buy empty motels and new construction buildings,” said Paul Schon, who with partner Artem Tepler formed Schon | Tepler Partners in 2009. “They’re buying these new construction beautiful buildings with all the bells and whistles.”
Schon | Tepler Partners did not originally develop these complexes to be sold to the HACLA agency.
“We developed them market rate,” Schon said. “When Covid happened, we heard that the state raised a bunch of funds to buy buildings and house the homeless. So we reached out to them.”
HACLA had been considering the two buildings since they were early in development.
“They were still under construction,” Schon said. “They asked when we would get the certificate of occupancy. They toured it pre-appliances.”
Schon | Tepler has since installed stainless steel appliances, cabinets, high ceilings, central air and washer/dryers in all of the units.
“Overall, we are very happy with the transaction even though we faced some Covid delays,” Schon said.
The deal on the apartment buildings went very smoothly.
“They wanted to be as close to $400,000 a unit as possible,” Schon said. “We gave them what we believed to be fair prices.”
Measure ULA — the so-called “Mansion Tax” which began April 1 that places 4% tax on sales of property $5 million or higher and 5.5% tax on sales $10 million or higher — didn’t affect the sale because HACLA is a nonprofit.
“They’re the best buyers because of where the high-interest rates are,” Schon said. “It’s hard to find a buyer. And as a seller, we don’t want to pay the ULA tax.”
Schon feels that HACLA has bought some quality product with these two purchases.
“They’re both in trendy, good neighborhoods,” he said.
Schon and partner Tepler said they feel good about addressing the housing crisis in the process.
“Initially, the intention was just a market-rate product,” Schon said. “We’re doing our part in providing homeless housing and getting them off the streets.”