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Pacific Urban Investors bought a Koreatown apartment complex at a $50M discount to what the seller, Equity Residential, paid in 2019.
The property, Next on Sixth, holds 398 apartments and a ground-floor, smaller-format Target. Pacific Urban paid $139M, or approximately $349K per unit, CoStar News reported. EQR bought the property in 2019 for $189M.
The sale is among the largest in LA County this year, along with Holland Partner Group’s $141M purchase of a 344-unit Duarte apartment in February and Advanced Real Estate's $202M purchase of two Hollywood towers from Kilroy Realty in April.
Next on Sixth opened at the corner of Sixth Street and Virgil Avenue in 2017. Its street-level Target is about 20K SF.
One aspect of EQR's strategy is to sell "older, capital-intensive assets or assets where we have heavy concentrations" to pay for stock buybacks and other priorities, Equity Residential CEO Mark Parrell said on the company’s first-quarter earnings call. The REIT owns three other buildings in Koreatown, all of which hold roughly 200 to 300 units.
Equity Residential and AvalonBay Communities announced in May that they are merging into a new company that will have a $69B enterprise value and oversee 180,000 units, with another 10,800 under construction across the country.
Average rent in the neighborhood is approximately $1,970 per month, about 18% below the LA metro average, according to CoStar. Vacancy in Koreatown is slightly above the regional average, at 5.9%.
Multifamily operators across the country grappled with a triple threat of high supply, lackluster rent growth and operating costs that are outpacing incomes.
UPDATE, JUNE 26, 2:26 P.M. PT: The story has been updated with information about top LA County transactions.
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