Value-Add Investors Flock to Hollywood

LOS ANGELES—Chicago-based investor Waterton has purchased the Vida Hollywood, a 345-unit multifamily property in the heart of Hollywood. This is the investor's first purchase in the Hollywood market, and it plans to implement a value-add strategy at the property. The purchase price and the name of the seller were not disclosed; however, sources unrelated to the deal tell GlobeSt.com that Waterton purchased the property for $88.5 million from Carmel Partners.

Hollywood is seeing a rush of investors recently, specifically in the office sector with the ICON at Sunset Bronson Studios and the Columbia Square developments, which have attracted employers like Viacom and Netflix to the area. Those employers are, in turn, attracting investors like Waterton to the market. "We think there is a tremendous amount happening in Hollywood," Mark Stern, the SVP of acquisitions at Waterton, tells GlobeSt.com. "We see a tremendous amount of jobs coming to the area. I think the addition of jobs and its location in the Los Angeles area, as well as its proximity to retail, restaurants and public transportation makes it a great area to own a rental property."

Waterton, a value-add investor, underwrote the investment for five years with plans to renovate and reposition in the interim. Stern wouldn't be specific about the investment amount, but expected that the firm would spend $10,000 per unit and another $2 million on the exterior and amenities. "We thought that the property was a great candidate to go through a renovation and to be updated to more modern standards," he says. "We plan to update both of the interiors and exteriors at the property, with the interior being the kitchen, bathrooms and flooring. We think that the property and the amenity package can be upgraded to compete with more modern properties. We think this is a great opportunity to come into a market and offer residents a more affordable alternative to the product that is being built in the submarket."

Two blocks from the Metro Red line, the 345-unit property has a mix of studio, one- and two-bedroom apartments and an amenity package that includes subterranean parking garages, two resort-style swimming pools with sundecks, a 24-hour fitness center, an on-site dog park and a soundproof recording studio. The finished product will compete with new development in the area, but will be a discount in rent.