$500M sale tops list of LA multifamily deals in 2022

2022 was the year the Southern California multifamily market was impacted by politics. Elected leaders called on developers to help lift the state and the region out of its housing crisis, and voters had a number of choices on the ballot. Housing played a major role in the campaigns of new Mayor Karen Bass and her opponent, billionaire developer Rick Caruso.

A majority of the Los Angeles City Council pushed to keep the city’s pandemic eviction moratorium going despite the hardship it caused small business property owners.

Just before the year ended, Councilmember Nithya Raman announced that she would lobby to make the pandemic’s tenant protections permanent. Her initiative frustrated members of trade group Apartment Association of Greater Los Angeles, said Dan Yukelson, AAGLA’s executive director who has vigorously campaigned to end the moratorium throughout the year.

“There is no certainty as to when the now three-year and counting “temporary” COVID measures will end,” he said. “At this time, even far more disruptive regulations are being contemplated that will surely cause further erosion of our property rights, reduce our incomes and increase our risks of doing business.”

Rising interest rates also created turbulence for multifamily developers, however, investment in the market continued around the region. More than 50 apartment projects broke ground in the Los Angeles area in 2022, according to a recent Marcus & Millichap report. It also forecast that 10,000 apartments are scheduled to be delivered in the upcoming year.

The past year was both a good time for the multifamily business and also presented setbacks, said Eric Sussman, a professor at the UCLA Ziman Center for Real Estate.

“For the first six months, the market was fairly strong. Rents were continuing to grow and the economy was humming along. With the latter half of the year, we saw a real slowdown and rents started to decline,” Sussman said. “I expect rents to be flat or down in the city for the next few months.”

Here are 10 of the top multifamily deals in Los Angeles during 2022.

Thea at Metropolis | Downtown Los Angeles | $504 Million

Northland, a Boston-based private equity firm closed Los Angeles’ top multifamily deal in 2022 for $504 million for Thea at Metropolis. Northland paid the seller, a U.S. division of China’s Greenland Holdings, more than $735,000 per unit for the 685-unit complex at 1000 West 8th Street, about a mile away from Crypto.com Arena.

The original ask was $695 million for the 59-story apartment tower. A TRD story said that rising interest rates and Greenland’s eagerness to sell worked in Northland’s favor. The China-headquartered firm took a loss in the deal. It spent $715 million on the luxury tower.

1221 Ocean Avenue | Santa Monica | $330 Million

The Irvine Company sold its only residential building in Los Angeles County in April. The price tag for this 120-unit building was $330 million, or $2.7 million per unit. In 1998, the company bought 1221 Ocean Avenue for $44.1 million.

Santa Monica-headquartered REIT Douglas Emmett formed a joint venture with an unidentified partner to acquire the building, located a couple of blocks from the Pacific Ocean. This luxe address’ past residents includes celebrities such as Larry David, Britney Spears and Dwayne “The Rock” Johnson.

3150 Wilshire Boulevard | Koreatown | $235 Million

This 464-apartment complex traded for more than $565,000 per unit, according to property records. Virginia-headquartered Harbor Group and Image acquired the Koreatown complex for $235 million, or $50 million more than when the property last traded in 2014. Capri Capital Partners and Tru America were the sellers in the deal.

Though it was built in 2014, Harbor Group said the property needs renovations. The firm plans to spend $22.3 million to renovate common areas, some apartments and other interiors.

The Bahay | Historic Filipinotown | $138 Million

Stockbridge Capital paid $685,000 per unit for the 200-apartment mixed-use complex in the Historic Filipinotown neighborhood of Echo Park, which borders downtown Los Angeles.

Built in 2020, The Bahay complex includes a 24,000-square-foot Target store on its ground level. There’s also 35,000 square feet of shared amenity space which includes a pool and an outdoor lounge. The mixed-use compound was built on the site of a former rink used by the L.A. Derby Dolls women’s roller derby team.

Lexington Apartments | Agoura Hills | $87.3 Million

This 178-apartment complex sold for more than $490,000 per unit in September. MG Properties, headquartered in San Diego, and Intercontinental Real Estate Corp., based in Boston, acquired the 36-year-old complex through a joint venture.

The Lexington deal was the largest trade by size in the Agoura Hills area in the past decade, according to Real Capital Analytics.

The Lexington offers one- and two-bedroom apartments in 11 two-story buildings on 15 acres. All of the apartments had been renovated within the past five years, according to a TRD story.

Avalon Studio 4121 | Studio City | $76 Million

A 149-apartment complex traded for more than $510,000 per unit in September. Located at 4041-4121 Radford Avenue, the complex is comprised of two buildings, with one- and two-bedroom apartments. Avalon Studio 4121 was 98 percent leased when the deal took place.

The new owner, Tarzana-based Gelt, aims to spend $5 million on a renovation expected to take three years, according to Jeff Harris, a partner in the firm. The 1.26-acre property also includes a fitness center, game room, lounge and courtyards.

Elements 616 | Redondo Beach | $74.5 Million

Clovis-based Ideal Capital Group sold the 81,647-square-foot complex called Elements 616 to the Ray Pellegrino Trust, headquartered in Rancho Palos Verdes. The deal closed in March and penciled out to $74.5 million, or more than $709,000 per unit.

The 105-unit complex, located a block from the ocean, has a mix of studios and lofts, which include one-bedroom units, one-bedroom den/loft units and two-bedroom units. Ideal Capital spent about $25 million on improvements. In 2019, a joint venture of Ideal and Aegon Capital Group, paid $53.5 million for 616 Esplanade.

Vue Los Feliz | Los Feliz | $64 Million

Alliance Residential paid more than $479,000 per unit for this 132-apartment complex.

Built in 1988, the complex offers a range of floor plans such as studios, one- and two-bedroom apartments. It also has an indoor saltwater swimming pool, spa and a rooftop patio.

According to a TRD story on this deal, apartment buildings constructed after 1980 are popular with investors in Los Angeles, Santa Monica and West Hollywood because they aren’t subject to rent control.

Langdon Park | West Covina | $48.6 million

Los Angeles-based investment firm Langdon Park Capital bought the 138-unit complex at 1829 East Workman Avenue. The deal closed in August for $48.6 million, or about $352,000 per unit.
The former owner, Abacus Capital Group, acquired the apartment complex, formerly named Atrium at West Covina, for $33.9 million in 2018.

The Langdon Park complex has a mix of units, such as a 526-square-foot studio to 1,465-square-foot three-bedroom units. Malcolm Johnson, Langdon Park Capital’s chief executive officer, said that his company would make more than $3 million in capital improvements to its West Covina property.

Village Lofts Apartments | Westwood | $34.4 million

Ventura Investment Co, headquartered in Camarillo, acquired the 31-unit Village Lofts Apartments, located at 11024 Strathmore Drive, in March. The seller was Phoenix Property.

The deal pencils out to more than $1.1 million per unit.

Village Lofts were built in 2015 and are located a mile away from the campus of University of California — Los Angeles. Floor plans include a two-bedroom, two-bathroom unit which runs up to 990 square foot. Rents at the building start at $6,600 per month, according to the RentCafe listing site.

Read more

Los Angeles

The Closing: Kevin Shannon

Los Angeles

LA drew $19B in multifamily investments over past year

Los Angeles

Interest rate hikes clog LA multifamily pipeline