CityView Lands Rare and Bargain Multifamily Deal in Hollywood Hills
A Rarity in the Tony Terrain
Los Angeles-based multifamily investor and developer CityView has acquired one of the two apartment buildings with more than 100 units in the Hollywood Hills, striking a deal at more than 10 percent under its pre-pandemic price.
The Deal
CityView paid $35.5 million for the 112-unit Candela complex at 1950 Tamarind Avenue, which translates to $316,000 per unit, according to the Commercial Observer. The seller, Raintree Partners, paid $40.7 million, or $360,000 per unit, for the complex in 2018, according to property records.
A Bargain
The property has a current occupancy of 98 percent, according to a statement from CityView CEO Sean Burton, who described the price as "significantly below replacement cost." The Candela is 50 years old and underwent upgrades under Raintree Partners’ ownership.
Opportunity for High-Return Renovations
"New ownership will have the opportunity to focus almost exclusively on high-return interior improvements to the unrenovated units and follow a proven renovation plan that has yielded significant premiums," said Joe Grabiec of Institutional Property Advisors, who brokered the deal with colleague Kevin Green.
Competition in the Area
Tenants of the Candela might be looking down upon new neighbors in the flatlands of Hollywood, where media company CMNTY Culture and developer Lincoln Property Company have announced plans for more than 700 apartments spread over two residential towers at Sunset Boulevard and Highland Avenue in Hollywood. This is a shift from earlier plans that included large amounts of studio, office, and retail space.
Shifting Market Dynamics
The swing to tower residential followed "shifting market dynamics," according to Sam Pepper, vice president of development at Lincoln Property, at the time it was announced.
CityView’s Expansion
CityView has also followed shifting dynamics, with a new office in Dallas, which has been relatively hot for multifamily development compared to Los Angeles. Indeed, the relatively recent Measure ULA property transfer tax, which puts a 5.5 percent levy on sales of more than $10.3 million, has tempered the market in the City of Los Angeles, which includes Hollywood.
The Discount
The discount on the price CityView paid compared to the 2018 sale of the complex would more than cover the Measure ULA tax.
Conclusion
CityView’s acquisition of the Candela complex is a rare and bargain deal in the Hollywood Hills, reflecting shifting market dynamics and the impact of the Measure ULA property transfer tax.
FAQs
Q: What is the price of the Candela complex?
A: $35.5 million
Q: What is the occupancy rate of the complex?
A: 98%
Q: What is the price per unit?
A: $316,000 per unit
Q: Who is the seller of the complex?
A: Raintree Partners
Q: What is the current market dynamic in the City of Los Angeles?
A: The market is being tempered by the Measure ULA property transfer tax, which puts a 5.5 percent levy on sales of more than $10.3 million.
