Laguna Point Properties has acquired a 1,037-unit, five-property multifamily portfolio in downtown Los Angeles from prolific developer Barry Shy. Sales prices were available through public records for four of the five assets, and Multifamily.Today can project a full portfolio transaction value of approximately $410 million.
MF1 Capital provided the buyer with $328.8 million in acquisition financing, putting it at approximately an 80% loan-to-value ratio. A JLL Capital Markets Team arranged the three-year, floating-rate loan, which includes two one-year extension options.
The assets in the portfolio were constructed as office buildings between 1910 and 1959, with Shy completing adaptive reuse work on the five structures between 2007 and 2010. The portfolio includes:
- Spring, 178 units at 650 S. Spring St.
- Lofts, 184 units at 548 S. Spring St.
- Manhattan, 198 units at 215 W. Sixth St.
- Main, 214 units at 111 W. Seventh St.
- Tower, 263 units at 600 S. Spring St.
The assets are all within a quarter mile of each other and have a mix of one- to three-bedroom floor plans. Rents, according to the property's website, range from $1,395 to $4,450 per month.
Heading for Recovery
The Los Angeles multifamily market, which suffered significant setbacks in the past two years, is showing signs of life. A first-quarter report from Matthews Real Estate Investment Services highlights how, despite some ongoing challenges, the outlook for the metro is optimistic for multifamily investors.
Demand has picked up significantly, and vacancy in the wider market stood at 3.4% at the end of the first quarter, a far cry from the peak of 6% in 2020. Citing CoStar data, the report notes that apartment investment volume grew significantly, with $12.8 billion in multifamily transactions closed in the past year at an average price of nearly $350,000 per unit.
Due to supply-demand imbalances, multifamily property values have shot up, even in the face of rent control regulations often cited as a harbinger of a market's future distress. At the same time, cap rates have fallen, averaging 4.1%, but with vacancies falling — and rent growth expected to remain robust — Los Angeles will continue to pull in investment.