A 430-unit affordable-housing apartment complex in Pacoima traded hands for $69 million this month, in the largest sale of its kind in Los Angeles County this year.
Berkeley developer Affordable Housing Associates bought the 12700 Van Nuys Blvd. property, known as Pierce Park, from Steadfast Cos., an Irvine multifamily real estate investment firm.
As an affordable-housing complex, the fully occupied property receives federal housing-assistance subsidies and is provided some tax relief. This helped to boost the property’s value and make it the largest sale of a Class C multifamily property in the county this year.
The units range from one to four bedrooms. The complex stretches over nine acres and includes amenities such as a children’s learning center, a playground, a full-size basketball court and a courtyard.
The buyer intends to operate the property as it is, according to Ron Harris, Marcus & Millichap’s Institutional Property Advisors executive vice president, who brokered the deal for both sides with colleague Joseph Smolen.
“Pierce Park presented the buyer with a unique opportunity to purchase a sizable property in the Los Angeles market,” said Harris. “With the stability of a long-term rent subsidy contract, the buyer will be able to maintain the property as a much needed affordable housing apartment project for many years to come.”
The sale breaks down to a little more than $160,00 a unit, which compares favorably with the May sale of a 62-unit multifamily complex also in the city. Those apartments sold for $8.5 million, or $137,00 a unit.
Century City Activity
Century City’s Constellation Place is slowly reducing the 300,000-square-foot vacancy left by MGM Studios’ August departure for Beverly Hills.
The 793,000-square-foot building owned by Chicago real estate investment company JMB Realty Corp. has leased up eight new tenants within the last four months to fill some 26,000 square feet. That follows a high-profile deal struck earlier this year with law firm Houlihan Lokey, which moved in this month to soak up about 80,000 square feet.
Among the new tenants at the 10250 Constellation Blvd. building are Milwaukee-based investment firm Crabel Capital Management LLC and MacQuarie Holdings (USA) Inc., the U.S. arm of an Australian real estate finance company.
Crabel Capital signed a 10-year lease for about 10,200 square feet on the 26th floor of the building. The deal, valued at more than $6 million, will allow the firm to expand its L.A. offices and move some of its primary operations from its Midwestern headquarters.
Meanwhile, MacQuarie is also expanding its L.A. presence after signing a deal for 5,200 square feet on the 22nd floor. The five-year lease is valued at $1.5 million.
Though most of the deals are much smaller, the flurry of activity has been welcomed, according to LA Realty Partners Principal Gary Weiss, who represents JMB.
“For so many years, there was never any space because it was 100 percent occupied,” said Weiss. “Since MGM moved, the activity has been fantastic. There’s still vacancy, still 200,000 available, but a lot of action and interest.”
Portfolio Boost
An aggressive acquisition strategy has been the hallmark of Hudson Pacific Properties Inc.’s first year as a publicly traded company – and it’s cost the company.
The West L.A. real estate investment trust, which has a media- and technology-heavy portfolio stretching from San Diego to San Francisco, saw its revenue more than double to $36.9 million in the third quarter, largely driven by growing rental income and a larger portfolio.
The company lost $2.6 million in the quarter, due to its heavy debt obligations, but funds from operations – a key metric for REITS adds depreciation and amortization expenses back into earnings to get a better picture of cash performance – rose nearly 50 percent to 25 cents a share.
Also in the quarter, Hudson signed or renewed more than 112,000 square feet in leases, increasing its office occupancy rate half a percentage point to 91.3 percent over the period.
Last quarter, Hudson bought Google Inc.’s Santa Monica building at 604 Arizona Ave. for $21.5 million. In San Francisco, the company also bought a 50,000-square-foot office building, which it is converting into creative office suites, and a fully leased 137,000-square-foot office building.
Still, the acquisitions have racked up debt, which now stands at $298 million, and left the company with a debt-to-capital ratio of 29.6, according to Bloomberg News. That’s high for a REIT of its ilk and may not be not sitting well with investors, who have driven the share price down almost 25 percent over the past 12 months. Shares closed at $12.22 on Nov. 9.
Staff reporter Jacquelyn Ryan can be reached at [email protected] or (323) 549-5225, ext. 228.
