Investors Plan Upgrades for $15M Apartments

HOLLYWOOD-Interstate Equities Corp. of Los Altos has paid $14.5 million for two apartment complexes totaling 69 units and plans to spend $15,000 per door to upgrade the complexes, according to Hendricks & Partners. The sale and the planned capital improvements illustrate the growing appeal of the Hollywood multifamily market, according to Robin Ossenbeck of Hendricks & Partners, who notes that the deal closed at a cap rate of 3.6%.The properties are the 32-unit Mansfield Square at 1318 N. Mansfield Ave. and the 37-unit Mansfield Circle at 1229 N. Mansfield Ave. Interstate Equities bought them from JMF Enterprises Development LLC of Los Angeles."Institutional investors are now discovering Hollywood," says Ossenbeck. She says that Interstate could realize substantial upside in rents at the buildings, which the seller had owned since 1996. Other investors and developers that have entered the Hollywood market include Seattle-based Security Properties Inc., which acquired the 298-unit Serravella apartment complex for $64.25 million and plans further upgrades to the recently renovated property, according to Dean Zander of Hendricks & Partners.Security Properties acquired the asset in partnership with GMAC Institutional Advisors, which owns another property in the immediate vicinity. Foster City-based Legacy Partners unveiled plans recently to build a new Hollywood multifamily project, a 183-unit, five-story apartment complex with 13,000 sf of ground-floor retail space at 7950 W. Sunset Blvd. The project will occupy a site that is now a parking lot, for which Legacy has signed a long-term ground lease with the Director's Guild of America.In nearby West Hollywood, the AvalonBay apartment REIT recently acquired the 82-unit Fuller Martel apartments at 1443 N. Fuller Ave. for $17.5 million. The Fuller Martel, which was 98% occupied at the time of the sale, was sold by an affiliate of Black Rock Realty Advisors.