Institutional Property Advisors (IPA), a division of Marcus & Millichap, announced the sale of Terraces at La Cienega, a 42-unit apartment property located just steps from the world-famous Sunset Strip in West Hollywood, California.
Paul Darrow of Marcus & Millichap, and IPA’s Greg Harris, Kevin Green, and Joe Grabiec represented the seller and procured the buyer in the transaction.
The team represented the original builder of the property, which was constructed in 1990 and is exempt from West Hollywood rent control but subject to the AB1482 tenant protection act. “The offering was truly a generational buying opportunity as West Hollywood’s ownership rarely puts a mid-size 1990-built multifamily asset up for sale,” said Darrow.
“There are only six other buildings of this size and vintage that even exist in West Hollywood, let alone come to market, and this building was best of the best regarding location,” commented Darrow. “As a result, the deal attracted interest from some ultra-high net worth families, foreign investors, 1031 exchange buyers, institutional investors, and developers, including the winning buyer, LaTerra, which was backed by institutional capital.”
LaTerra plans to capitalize on the world-class location by upgrading the asset’s exterior, common areas, and interior with luxury finishes and build 10 accessory dwelling units (ADUs) as part of AB3182, which was created to help alleviate the housing crisis by giving owners the opportunity to add 25 percent of the existing density to properties.
“With construction costs hurting developer’s pro formas, many developers with in-house construction expertise like LaTerra are turning to value-add investments, which can generate competitive returns to ground-up development without the entitlement and ground-up construction risk,” noted Darrow.