Essex Buys Broken Condo Project for $27M

IRVINE, CA-Palo Alto-based apartment REIT Essex Property Trust has acquired a nearly completed 115-unit project called the Dupont Lofts from Cathay Bank for $27 million and plans to complete the project. John Whitmire of Bel Air Capital Advisors in Beverly Hills, who represented the buyer, tells GlobeSt.com that the project, at 18883 Von Karman Ave. at the corner of Von Karman and Dupont Drive, was approximately 92% complete at the time of the acquisition, which was an all-cash purchase.

The deal was an off-market transaction with the bank managing the bidding process, according to Whitmire, who notes that “a very diverse pool of bidders” vied for the project. He says that there was a best-and-final round of bidding in August and that the property was under contract once or twice with bidders who didn’t perform, then Essex came in and closed the transaction very quickly.

Essex acquired the property as an REO from Cathay Bank and other bank participants who had foreclosed on a construction loan earlier in the year. Gary Cook of Cathay Bank represented Cathay and the other bank participants in the sale.

Whitmire describes the purchase price as significantly below replacement cost, estimating that it would cost $60 million to develop if the project were starting today. Because it was originally a for-sale project, the finishes in the units are of very high quality, even higher than some other for-sale projects in the market, he adds.

The 115 units of the Dupont lofts average 1,497 square feet in 17 floor plans ranging from 1,022 square feet to 2,176 square feet. They include 20 one-bedroom units, 78 two-bedroom units and 17 three-bedroom units. The four-story condominium building is situated over a two-level underground parking garage with 271 spaces.