Institutions Show Up in Trophy Markets

LOS ANGELES—Institutions and foreign investors went head-to-head to compete for the Sunset, a 179,000-square-foot, experiential mixed-use development on the Sunset Strip. Broadreach Capital Partners sold the property for $210 million in a competitive sale that brought institutions, including core funds and REITs, high net worth investors and foreign buyers to the bidding block.

“West Hollywood is one of the hottest markets in L.A. and Southern California,” Ryan Gallagher, a senior managing director at HFF, tells GlobeSt.com. “The proximity to Beverly Hills and the surge in media related demand as well as having one of the best restaurant and night life scenes in the country has made it a highly desirable location for the brightest creative talent and tech and media tenants that follow them.” Gallagher represented the seller in the deal along with Michael Leggett, who is also co-head of HFF's West Coast team, managing directors Bryan Ley and Andrew Harper and director Tim Geiman. The buyer's name was not disclosed.

The property features both a retail and office plaza, and is 88% leased to a tenant mix that includes Equinox, SoulCycle, H&M and Oliver Peoples. Additionally, the property has three billboards, which provide a steady stream of revenue. As of December, all three billboards were leased. Broadreach sold the complex because it was closing the purchasing fund. “This was one of the last remaining assets in a closed end fund,” says Gallagher.

As reported earlier, this is one of several recently high-profile transactions that have kicked off 2017. This activity is a stark comparison to 2016, which started off rocky before becoming another high-volume year in terms of investment sales. Gallagher expects this activity to remain strong throughout the year. “We believe you will continue to see a significant volume of transactions in 2017,” he explains. “There is a large amount of loan maturities and close end funds that will need to exit assets.”

LOS ANGELES—Institutions and foreign investors went head-to-head to compete for the Sunset, a 179,000-square-foot, experiential mixed-use development on the Sunset Strip. Broadreach Capital Partners sold the property for $210 million in a competitive sale that brought institutions, including core funds and REITs, high net worth investors and foreign buyers to the bidding block.

“West Hollywood is one of the hottest markets in L.A. and Southern California,” Ryan Gallagher, a senior managing director at HFF, tells GlobeSt.com. “The proximity to Beverly Hills and the surge in media related demand as well as having one of the best restaurant and night life scenes in the country has made it a highly desirable location for the brightest creative talent and tech and media tenants that follow them.” Gallagher represented the seller in the deal along with Michael Leggett, who is also co-head of HFF's West Coast team, managing directors Bryan Ley and Andrew Harper and director Tim Geiman. The buyer's name was not disclosed.

The property features both a retail and office plaza, and is 88% leased to a tenant mix that includes Equinox, SoulCycle, H&M and Oliver Peoples. Additionally, the property has three billboards, which provide a steady stream of revenue. As of December, all three billboards were leased. Broadreach sold the complex because it was closing the purchasing fund. “This was one of the last remaining assets in a closed end fund,” says Gallagher.

As reported earlier, this is one of several recently high-profile transactions that have kicked off 2017. This activity is a stark comparison to 2016, which started off rocky before becoming another high-volume year in terms of investment sales. Gallagher expects this activity to remain strong throughout the year. “We believe you will continue to see a significant volume of transactions in 2017,” he explains. “There is a large amount of loan maturities and close end funds that will need to exit assets.”