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LOS ANGELES-The KOR Group has recapitalized the 322-unit Pegasus Apartments complex at 612 S. Flower St. in Downtown L.A., with Newport Beach, CA-based Buchanan Street Partners investing $21.6 million of principal in a new joint venture with KOR that now owns the property. In the recapitalization, which was arranged by the Southern California Capital Markets Group of Cushman & Wakefield, led by managing director Marc Renard.

The buyer of the Pegasus is a newly formed joint venture called BSP/KOR, which acquired it from a KOR/Lubert-Adler partnership. The new ownership plans to renovate and upgrade all 322 units.

The 13-story Pegasus building, situated between Wilshire Boulevard and West SIxth Street in the city’s financial district, includes 12,500 sf of retail space occupied by the Daily Grill, Rosenaur Wu, Downtown Florist and Café Primo. It was built in 1949 and formerly served as the corporate headquarters for Mobile Oil Co.

Marc Renard, managing director of Cushman & Wakefield’s Southern California Capital Markets Group, comments that the transaction demonstrates the “continueddemand for urban-infill, well located properties in high-barrier-to-entry markets,” despite the national slowdown in investment property sales. Renard says that the property proved “extremely attractive to a wide variety of investors.”

The Kor Group purchased the Pegasus building in 2001. When the Los Angeles-based company opened the doors to the Pegasus in 2003 after converting the former office building into apartments, it was billed as the largest adaptive reuse project in Los Angeles at the time. It remains one of the largest adaptive reuse projects in Downtown Los Angeles.

According to Alina Mardesich, vice president of Buchanan Street Partners, once the renovations are complete, the property “will be better positioned to compete with other upscale apartment towers in the area.” Since the conversion of the Pegasus, a host of new multifamily buildings have been completed in Downtown L.A., some of them via conversions of office buildings and some in ground-up construction.

The Pegasus is adjacent to a number of high-profile properties, including the Standard Hotel, the California Club, the Jonathan Club and the Los Angeles Public Library. It is within walking distance of the Staples Center, L.A. Live and the Los Angeles Convention Center.

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