$28M Property Holds Condo Potential

SANTA MONICA, CA-Carmel Partners of San Francisco has purchased the 174-unit Pico Lanai apartment complex, which includes a parking lot that could potentially be developed as a 37-unit condo project, according to CB Richard Ellis. Laurie-Lustig Bower of Team Lustig-Bower at CBRE tells GlobeSt.com that the new owners plan to continue to operate the complex as apartments, but the site has potential for condo development on land that is now a surface parking lot serving the apartments.

Team Lustig-Bower represented the buyer and the seller in the deal. Carmel, which is led by CEO Ron Zeff and chief investment officer Christopher Beda, paid $28.12 million for the property, which it acquired from Los Angeles-based Hill Street Partners. The selling entity, which is led by managing members Saul Berley and Joe Penner, had owned the property for a year.

The Pico Lanai complex is at 2501 S. Pico Blvd. It was built in 1960 and sits on a site of 2.8 acres. The deal closed at a cap rate of 5.3% and approximately $417 per sf.

The property's 174 units include 173 one-bedroom apartments and one two-bedroom unit in 17 buildings. The existing buildings are on two contiguous lots totaling 2.8 acres and "are well-positioned to provide development potential," Lustig-Bower tells GlobeSt.com.

Lustig-Bower explains that the existing surface parking lot, which serves the apartments, could potentially be used as a development site for condos, with a subterranean lot to replace the surface parking for the apartments and also provide parking for the condominiums. It's also possible, she says, that a condo project could be built with attached garages.

The existing apartment units are fully furnished and the tenant base is composed predominantly of Santa Monica City College students. The property is within walking distance to the newly renovated three-acre Virgina Avenue Park, located on the corner of Pico Boulevard and Cloverfield Avenue.