This Week's LA Deal Sheet
Pacific Crest Realty purchased a pair of 1920s-era brick buildings totaling 87 units in Koreatown from Prana Investments for $12M. The buildings, which will be renamed KTown Apartments on Hobart and KTown Apartments on Catalina, are the firm's third and fourth acquisitions in Koreatown within the past 18 months.
Founding principal Dan Tenenbaum (with wife Yael) tells us PCR owns 450 units throughout LA, but these days it's focused on Koreatown. There's demand, especially among Millennials, for quality housing in areas like this—transit-friendly, walkable to restaurants and services, with so much excitement right at their doorstep. That said, these brick masonry buildings from the '20s may have character, but they need a lot of work. Many buildings of this era have been neglected for decades, Dan says. One of the first things on the list is to replace the original cloth wiring. (You read that right—it looks like fuzzy black electrical tape.) "We had to get a quick lesson on that." Luckily, the buildings were seismically retrofitted in the 1980s, when the floors were bolted to the frame to help prevent cave-in during a quake. Berkadia's Brent Sprenkle repped both the buyer and seller.
PCR intends to restore the buildings' architectural elements while adding modern touches. With exposed brick walls in almost all of the units and a K-Town location, Dan expects the buildings to appeal to renters who want a "cool place to live." A majority of the units—70 out of 87—are studios, which affects the target market. But Dan says studios fit in with the current micro-unit vogue. "What they built in the 1920s is coming back into fashion." He notes Millennials are typically people who are moving away from home or getting their own place after being in a roommate situation. Young people, even couples, are choosing to rent studios because the absolute rent is lower, even though it's higher on a PSF basis. Plus, the urban neighborhood is an extension of their common area amenities.
According to the LA Conservancy, the Hobart building is in the Beaux Arts style, while the Catalina building is Beaux Arts in form but features Moderne sculptural accents. The architect for both was C. Waldo Powers, who designed a number of large apartment buildings during LA's 1920s building boom; at least two of his projects have been designated City of LA Historic-Cultural monuments. Before launching PCR in 1995, Dan worked for Disney. But you don't need big mouse ears to hear the buzz about Koreatown. Dan says the submarket is trending because "it's fun, convenient, and has an energy that makes you feel like you're really in the city." The buildings are both 98% leased.
PCR's other Koreatown properties include Chapman Apartments and Haddon Hall (above), the latter designed by preeminent movie theater architect S. Charles Lee. Speaking of movies, while at Disney, Dan marketed the company's animated classics on video. He started buying apartments on the side, visiting bank REOs in Burbank after work. He recalls that when The Little Mermaid ran out at stores, panic ensued, creating demand for all future releases. Applying this to the apartment business, PCR trains managers to create a sense of urgency among potential renters, though he notes, in today's low-vacancy world that's not just a marketing ploy. Outside of work he's involved with Home for Good, a coalition of United Way and the LA Area Chamber of Commerce that helps place homeless individuals into existing apartments.
Westcore Properties purchased a 634k SF infill industrial portfolio from MetLife for $69.4M. The properties consist of eight buildings in four SoCal cities, including a 301k SF business park in Buena Park (7100, 7050, 7051, 7101 and 7150 Village Dr). The property, which includes four multi- and single-tenant light industrial buildings plus a data center, is leased to 15 tenants, including Isuzu Motors. The other properties include a 165k SF warehouse/distribution building at 300 E Arrow Hwy in San Dimas; an 88k SF building at 4422 Airport Dr in Ontario; and an 80k SF building at 14301 Gannet St in La Mirada. Westcore now owns more than 2.5M SF of commercial space throughout SoCal. Darla Longo and Barbara Emmons of CBRE repped MetLife.
Sunny Hills Management Co bought Airport Spectrum, a 500k SF, two-building office campus next to LAX, from Decron Properties for just under $61.3M. The seller was advised by Marc Renard, Manfred Schaub and Chris Sinfield of Cushman & Wakefield’s Capital Markets Group, which says this is the largest office sale in the LAX submarket in over a decade. Built in 1980, Airport Spectrum (5757 and 5767 W Century Blvd) is at the entrance to LAX and features two high-profile outdoor billboards. Decon acquired the property in 2000 when it was 30% leased, and spent more than $6M on capital improvements, raising occupancy to 75%. Tenants include UCLA, Expeditors International and the TSA.
Symbiont LP bought The Vintage, a 62-unit multifamily property in Corona (1349 Circle City Dr) from Stonebridge Corona Apartments for $11.4M or more than $184k/unit. According to Berkadia's Bruce Furniss, who closed the sale, The Vintage is a relatively new asset in a supply-constrained market. This represents the lowest cap rate and highest price per unit for Corona's multifamily sales this year.
DLJ Real Estate Capital Partners bought a development site in downtown Culver City (9727 Washington Blvd) from Bank of the West in an off-market transaction. The property, which includes an 11k SF bank building on a 28k SF lot, will be leased back to the seller during the entitlement period. BRC Advisors' Edmond Bina repped DLJ.
CBRE sold Lemon Grove Plaza in Oxnard (2001-2091 Oxnard Blvd) on behalf of a private family trust for $8.1M. The shopping center contains nearly 100k SF and is leased to national tenants that include Smart & Final Extra, Jersey Mike’s Subs, Burger King, and Econo Lube & Tune. Lemon Grove Plaza is subject to a 33-year absolute triple net ground lease, with a recent notice to extend the lease another 33 years, according to Alex Kozakov, who repped the seller along with Patrick Wade, Larry Tanji, Scott Siegel and Maxx Cohen. He says the transaction provides the new owner a well-located investment property and zero management responsibilities. (Not even to monitor those chemtrails?)
Ontrack Investments bought a 45k SF industrial building in Santa Clarita (26308 Spirit Ct) from the William Hart School District for $5.2M. NAI Capital's Chris Jackson and Todd Lorber repped the seller. The freestanding warehouse within Centre Point Business Park was excess property sold by the school district, which continues to occupy two adjacent buildings.
Matthew Sullivan of Lee & Associates ISG repped both sides in the sale of the Rosamond Garden Apartments, a 120-unit multifamily complex in Rosamond. PARS-15 LLC bought the property (3400 15th St) from Rosamond Development for just over $5.7M. The buyer plans to renovate the complex, which was built in 1985 and is 75% occupied.
Koloe LLC sold three office buildings totaling 7,210 SF in Studio City (3751-3757 and 3759 Cahuenga Blvd West) to a private investor for just under $2.6M. The property was 50% occupied by a television production company at the close of escrow, according to Charles Dunn Co's Stacy Vierheilig-Fraser, who repped both sides. It consists of a two-story creative office building and two single-story buildings with outdoor courtyards. The buyer plans to occupy the remaining space as an owner/user for his mortgage company, Standard Home Lending, which is relocating and expanding from 13223 Ventura Blvd.
Landmark Marketing bought a 20-unit apartment property in Long Beach (922 East 2nd St) for $3.3M. Stepp Commercial's Robert Stepp and Michael Toveg repped the buyer as well as the seller. Built in 1946 with a recent rehab for most of the units, the property is in the Alamitos Beach neighborhood next to Downtown Long Beach.
Marcus & Millichap's Salleh Beitollahi and Rick Raymundo closed the sale of 236 N Cedar St, an eight-unit multifamily property in Glendale, for just over $1.8M.
NHC Group, a marketer of beauty and health products, bought a vacant 7,100 SF building in Burbank (2049 N Lincoln St) from MarketHealth for just over $1.8M. Charles Dunn Co's Roger Beck repped the seller, while Marcus & Millichap represented the buyer. NHC is relocating from a leased space in Burbank, and owner Neyda Ricardo will use some of the new space to broadcast her radio show. The seller built the property in 2008 and recently relocated. Roger, who also repped MarketHealth in purchasing its new building in Studio City, says newer, upgraded small buildings are in demand as users seek to avoid rising lease rates.
Storm Properties CEO Tom Grzywacz, Storm family members and the Fujimoto family gathered at the site of the Fujimotos' former Coast Nurseries property in Gardena to break ground on the 114k SF Storm Fujimoto Industrial Center. The Class-A industrial facility (15913 S Main St) will feature dual two-story office pods totaling 8k SF to accommodate either one or two tenants. The site spans an entire city block. The CBRE team of John Schumacher, Brian Held, Robert Flores and Bret Quinland is handling leasing. Completion: Q1 2016.
Ness Holdings received approval for the final phase of a 35-unit condo project near the corner of Santa Monica Boulevard and Fairfax in West Hollywood. Citing a lack of inventory for new construction in the WeHo market, managing partner Steven Taylor says the company plans to break ground on the project within 30 days. In other Ness news, the firm closed the $8.5M, off-market purchase of an 18-unit apartment building in Beverly Hills, near the intersection of La Cienega and Wilshire, with plans for an extensive rehab.
California Landmark Group opened The Enclave, a gated community of 10 luxury villas in swank Century City. According to president Ken Kahan, these are Century City's first single-family detached homes in 30 years and most likely will be the last, given that no plans currently are in place to add to the existing inventory of 32 houses. (By contrast, the upscale, urban neighborhood has more than 2,000 condos, and developers have approvals to build an additional several hundred.) The Enclave's custom homes are set on a private street behind a staffed guardhouse shared with the neighboring Century Woods community, one block from Westfield Century City. Prices begin at just under $6M for the villas, which range from over 5,700 to 6,700 SF and feature such splurgy touches as elevators, private courtyards and maid’s quarters.
REMEMBERING PHIL NICHOLSON
By now you've heard the sad news that Phil Nicholson, a founding partner of Cox, Castle & Nicholson, lost his fight with lung cancer last week at age 79. He began his law career at Dillavou & Cox, where he rose to become a senior partner. In 1968, he partnered with George Cox and Richard Castle to found Cox, Castle & Nicholson, which he grew into one of the largest real estate law firms in the US. Cox Castle partner and longtime friend Mario Camara, who will serve as one of Phil's eulogists, tells us Phil had an impact on many careers and was deeply loved. "Just about everything we do around here is with Phil's compass in mind," Mario says, referring not only to his skills as a lawyer but also his mentoring of the firm's lawyers and his community involvement. "He really set the tone for the law firm." Known for his athleticism, Phil was an avid road, mountain and track cyclist for more than 40 years. "He also loved his Harley and BMW motorcycles," Mario says.
Mario (center, with Phil and Phil's wife, Joan), says Phil was counsel to prominent LA developers like Rob Maguire, Ray Watt and David Murdock, to name a few. Additionally, he was counsel early on to Boise Cascade Home & Land Corp. "Out of the Boise Cascade representation, we did projects all over the Western US and in particular on the Big Island of Hawaii." Transcontinental Development, a Boise Cascade spinoff formed by Lake Las Vegas developer Ron Boeddeker, developed much of the Kohala Coast. Mario notes another of Phil's clients, Mike Meyer, founded Bay Apartment Communities, now known as AvalonBay. Recent years were spent acting as a trustee for the family trusts and estates of some of LA's most prominent real estate families. Mario says Phil will be remembered for his concern for people. He notes that in sports they talk about transformational athletes who help everybody around them be the best they can be. "He was a transformational human being."