SoCal Apartment Portfolio Trades For $275M

A two-property apartment portfolio in Southern California has traded hands for $275 million. Prime Residential purchased the properties, which are located in Hermosa Beach, from an institutional owner.

The two assets are Playa Pacifica, a $285-unit property built in 1972 and renovated in 2015 and 2016, and The Gallery, a 169-unit property built in 1971 and renovated in 2003 and 2004. The properties sold for $162.5 million and $112.5 million respectively. At 454 units, the two assets represent nearly a quarter of the total apartment stock in the city and 70% of the like-kind apartment stock in Hermosa Beach and Manhattan Beach.

Playa Pacifica has eight floor plans with studio, one- and two-bedroom units, all of which feature stainless steel appliances, quartz countertops and in-unit washer and dryers. The Gallery has four floor plans with studios, one-bedroom, one-bedroom-plus-loft and two-bedroom units. They have hardwood flooring, granite countertops, walk-in closets and crown moldings. Both properties are a mile from the Hermosa Beach Pier, and located near job centers, entertainment and shopping venues.

Kevin Green, Greg Harris and Joseph Grabiec of Institutional Property Advisors represented the seller and procured the buyer. Harris notes that the deal was “a compelling value-add opportunity” for the buyer,” and Grabiec added that there have been “no institutional-sized multifamily properties built here in the last 50 years.”

While isolated pockets in Southern California have performed well through the pandemic, overall California’s apartment market tumbled. Currently, most of the major metros in the state are seeing significant decreases in apartment rents. The May report from Apartment Guide has found that San Francisco, Oakland, Los Angeles and San Jose all rank among the top US cities with the biggest fall in one-bedroom rental rates. San Francisco and Los Angeles lead the nation for rent decreases.