LOS ANGELES-Essex Property Trust has acquired the 165 apartments and 38,543 square feet of retail space in the historic garment district building Santee Court, which was constructed in 1912 was converted to residential use in an adaptive reuse project in 2004, for $31.1 million in an all-cash deal. Ron Harris of Marcus & Millichap, who represented the buyer and seller L&B Realty Advisors of Dallas along with Greg Harris of Marcus & Millichap, tells GlobeSt.com that the property generated eight offers on an open-bid basis.

Santee Court, at 700-722 S. Los Angeles St. in Downtown Los Angeles, is designated as a historic structure and as such benefits from the Mills Act, which grants tax reductions to owners of such buildings in exchange for the owner’s agreement to maintain the building according to historic preservation standards.

Greg Harris says that the acquisition “provided Essex with the chance to acquire a significant interest in rapidly gentrifying Downtown Los Angeles. Essex is planning on re-leasing the vacant retail space and anticipates operating Santee Court as a premier loft project for a long-term hold period.”

The Santee project consists of seven distinct buildings that were developed in three phases. Phase one is Santee Court, a three-building complex that L&B Realty Advisors acquired in 2005. Phase two, Santee Village, is a three-building, 214-unit condominium development that was completed in 2006 and subsequently foreclosed on by B of A, which was the construction lender for that phase. Phase three is a 64-unit condominium tower that was completed in 2005 and sold to individual condominium buyers by the end of 2006.

Santee Court, slightly less than 200,000 square feet, is exempt from Los Angeles rent control statutes and possesses a vesting condominium tract map that allows for the retail to be sold separately from the residential units. Essex plans to operate the property as apartments.

Santee Court is the second property in the neighborhood to sell recently. Last week, a joint venture of Beverly Hills-based Kennedy Wilson and RECP Urban Partners bought 167 condos and 18,694 square feet of retail space at Santee Village from Bank of America.