HOLLYWOOD-Vista Investment Group LLC of Los Angeles has acquired a 100-unit mixed use apartment and retail project from Chateau Hollywood LLC of Los Angeles in a short sale that closed at a 1% cap rate that will rise to 8.5% when the project is fully leased, according to brokers who negotiated the deal. Ron Harris, an executive vice president in the Downtown Los Angeles office of Marcus & Millichap, tells GlobeSt.com that, "The actual cap rate at the closing was under 1%. However, once the buyer completes the renovation and lease-up program, the pro-forma cap rate will be approximately 8.5% for a prime Hollywood location."
Harris and Marcus & Millichap associate Maurius Jeffery were the listing agents for the property, which is at 1963 N. Cahuenga Blvd., just north of Franklin Avenue and just south of the 101 Freeway. Harris and Jefferey marketed the property as a short sale for 30 days during which time there were more than 30 tours of the complex, which generated double-digit offer activity.
Harris explains that the sellers worked out an agreement with the lender to allow him and Jeffery to list and market the property before foreclosing on the asset. The transaction closed on a non-contingent basis after a nine-day escrow.
The property was 60% vacant on the apartment side and 70% vacant for the 7,554 square feet of storefront retail. The sellers had spent nearly $3 million on renovations and capital improvements to the property, but the new buyer plans on spending many hundreds of thousands of dollars more before the renovation will be complete, Harris says.
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