Universe Holdings is betting on Inglewood and the Rams

Firm buys properties near Hollywood Park

TRD LOS ANGELES /
Feb.February 09, 2016 01:01 PM

Inglewood, which is “always up to no good,” according to Tupac, has not historically been a magnet for multifamily investment, especially not of the luxury variety. Its apartments rent for lower than the Los Angeles average. In the last year, asking rents in the city averaged roughly $1.50 a square foot a month, compared with the $1.95 in L.A., according to CoStar Group.

But Century City-based Universe Holdings, a privately-held investment firm led by CEO Henry Manoucheri, is placing bets that Inglewood’s residential market is heating up. It has gambled almost $15 million so far, acquiring a total of 77 units, on the prediction that the NFL stadium, the arrival of the Rams and the massive Hollywood Park development will increase rents in the area. The firm is looking to acquire more properties in as close proximity to the park as possible.

In the last two months, Universe purchased two multifamily buildings near the park for just under $6 million. It acquired 617 East 97th Street in January and 822 Myrtle Avenue in December.

But the firm began poking around Inglewood before the Rams’ move was anything close to certain, and before the Hollywood Park plan was publicly announced. It bought a 50-unit  building at 875 Victor Avenue, dubbed The Sycamores, in Nov. 2014 for $8.7 million. At the time, Rams-owner Stan Kroenke was only in the process of purchasing 60 acres in Inglewood through a holding company.

Samuel Landman, head of investor relations at Universe Holdings, said that the firm made its first investment in Inglewood based on rumors that the redevelopment was coming.

“We bet on it,” he said.  “We knew about it vaguely before it was announced. We knew that (a stadium plan) would be big, and once we knew there would be billions invested, we knew there would be a team, even if we didn’t know which one.”

The math on whether or not sports stadiums increase residential values in the areas around them does not necessarily support Universe’s play. In a 2015 study, Stanford economist Roger Noll said professional sports stadiums do not generate the local economic growth they often advertise.

But Landman said its investments were not solely based on the stadium. The firm sees Inglewood as one of the last affordable locations in close proximity to jobs in L.A.’s city center — even with the rent increases it has projected.

“It’s the last location near the city that is cheap, so whoever is there is going to pay the rent increases,” he said, adding that Universe has already raised rents at the first property it acquired. “From our whole portfolio, only eight (tenants) left, so everyone else has paid the increased rents. It’s still much cheaper comparatively. The same apartment in (L.A. proper) would cost $3 to $6,000.”

When Universe bought the Sycamores, average rent was $1,130 for the building made mostly of two-bedroom units. Universe spent $1 million renovating the apartments and began to raise the rents, Landman said. The two-bedroom units now cost more than $2,000 a month, and are fully leased. Asking rent averages $1.66 a square foot a month at the property, according to CoStar, which is about 16 cents higher than area averages.

At the newly-acquired Hollywood Park-adjacent properties, Universe plans on investing $750,000 in renovations and slowly raising rents.

Renovated units are about as new as it gets in Inglewood. The area hasn’t seen much ground up development in a climate where developers favor vertical properties filled with luxury units in elite locations. A major exception, of course, is the 2,500 residences that are being built as part of the Hollywood Park development.

But Universe is not the only investment firm acquiring older properties in the area and betting on the Rams. There were 61 residential buildings that traded hands in Inglewood over the past year, according to CoStar Group. Those properties sold for an average of $151,600 a unit, compared to the L.A. average of $208,000.

 

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