Northland Buys LA's Tallest Apartment Tower for $504M

Newton, MA-based Northland entered the California market in a big way this week by buying THEA at Metropolis, the 59-story luxury apartment building in Downtown Los Angeles that is the tallest rental building in DTLA.

The U.S. subsidiary of China’s Greenland Holding Group sold the building—which opened in 2020, the fourth tower in Greenland’s massive Metropolis development in DTLA—for a record $504M, which was significantly less than the group’s asking price of $695M.

Greenland completed a hotel and two condo towers at the master-planned Metropolis development and originally had planned THEA as a condo tower but decided to offer the building’s 685 units for rental and converted the condos into apartments when the building was completed in 2020.

Metropolis is in proximity to L.A. LIVE, a 5.6M SF sports and entertainment complex that includes the 7,100-seat Microsoft Theater and Crypto.com Arena, home of the NBA’s Los Angeles Lakers and Los Angeles Clippers, the NHL’s Los Angeles Kings and the WNBA’s Los Angeles Sparks.

According to a report in the Wall Street Journal, Northland said the purchase price represents a 40 to 45% discount to today’s replacement cost. WSJ said the original asking price 18 months ago of $695 was still less than the development costs absorbed by Greenland.

Northland, which owns and operates 26K multifamily units in 16 states, financed the acquisition with 10-year, fixed-rate debt. The majority of the equity came from Northland’s sale of an 826-unit property in Tucson sold earlier this year for $178 million.

“In THEA, Northland secured an extraordinary opportunity to acquire the highest quality luxury apartment tower in the United States at a steeply discounted price,” said Matthew Gottesdiener, Northland’s CEO, in a statement.

“Northland believes fervently in the enduring appeal of California and a vibrant future for Los Angeles, and we are encouraged to find these are contrarian opinions well compensated in the market today,” Gottesdiener said.

The sale of the 59-story residential tower is the latest in a series of asset sales by Chinese developers who have come under pressure from China’s government to reduce the amount of debt they’re holding.

Chinese firms have sold a total of nearly $24B of US commercial properties since 2019, according to MSCI Real Assets.

In September, China-based Dajai Insurance Group put three high-profile resort hotels in the US on the market, aiming for a combined sale price of $1.3B. Two of the assets are Four Seasons resorts—in Jackson Hole, Wyoming and in Scottsdale, AZ—and the other is the Montage, a resort in Laguna Beach, CA. Bofa Securities and Eastdil Secured are marketing the hotels.

The three properties are part of Dajai’s Strategic Hotels & Resorts portfolio, which encompasses 15 luxury US resorts and hotels, including the JW Essex House overlooking Manhattan’s Central Park and InterContinental hotels in Chicago and Miami.