(Read more on the multifamily market.)
HOLLYWOOD-StarPoint Properties of Beverly Hills has sold the 80-unit Sterling Apartments at 1800 N. Normandie Ave. for $21.7 million after acquiring the complex for $15 million in early 2006. The buyer was a New York City-based institutional investor.
Paul Daneshrad, CEO of StarPoint Properties, comments that the complex was "a very interesting asset for us because we bought the property from very sophisticated sellers who felt they had maximized the value and rents in the property." At the time StarPoint bought the property, GlobeSt.com reported that the Beverly Hills-based firm acquired it from the Kor Group of Los Angeles.
The Normandie Avenue building is a three-story complex that was more than 96% occupied when StarPoint acquired it. Daneshrad says that StarPoint "saw an opportunity to do a major class A rehabilitation and repositioning of the property to cater to the Hollywood elite who were looking for distinct apartments with a lot of character."
StarPoint spent $20,000 per unit, increased rents by 58% and achieved a 42% IRR on the property, which includes a mix of 16 singles, 40 one-bedroom/one-bath and 24 two-bedroom/one-bath units. The complex, now fully leased, was built in 1990.
The StarPoint upgrade program included interior and exterior capital improvements. The interior upgrades included new bathrooms, new cabinets, crown molding, stainless steel appliances, granite countertops, wood floors and new carpet. In addition, the company added a new gym and remodeled the leasing center and pool area and the exterior was repainted.
The 1800 N. Normandie property, which was listed by Kitty Wallace of Sperry Van Ness, was one of two apartment deals to close recently in L.A. The other was a six-property, 243-unit portfolio of buildings in the Mid-Wilshire District that traded for more than $22.1 million.
Janet Neman of Hendricks & Partners reports that the portfolio consisted of "distinctive 1920's character buildings" at 112 Occidental, 1310 Wilton, 3051 Leeward, 920 Hobart, 923 Irolo and 744 South Catalina. Neman, who represented the buyer and the seller, says that the deal "presented an incredible opportunity to acquire multiple properties in an area undergoing a local renaissance coupled with tremendous rental upside potential."
The buildings are exempt from rent control and are renting at rates well below market, Neman explains. She says that the buyer, 4D Development, will quickly be able to bring the rents up to market rates. Both 4D and the seller, Vadehra I Ltd., are based in LosAngeles.
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