Archstone Buys 167 KSF M-F Property in L.A. Area
By Barbra Murray, Contributing Editor
It’s not your usual multi-family asset. The Bay Club Apartments and Marina in Marina del Rey, Calif., has residences and boat slips and now it has a new owner. Decron Properties Corp. sold the 167,000-square-foot, mixed-use apartment complex to Archstone for approximately $44 million.
Decron had purchased the Bay Club, which sports 205 units, 207 boast slips and 11 end ties, in 2005 with plans for its usual long-term hold. However, current market conditions convinced the company that the timing was right to sell, which it did with the assistance of Institutional Property Advisors.
“The Southern California multifamily market is robust,” Greg Harris, executive director with IPA, told Commercial Property Executive. “We are experiencing strong rent growth across the market. That, combined with record-low interest rates supports increasing asset values. Core capital remains aggressive, with demand for coastal multi-family assets at peak levels.”
IPA also represented Archstone in the transaction.
Decron has put quite a bit of effort into Bay Club over the last seven years. The property sits on a leasehold from the County of Los Angeles that had been scheduled to expire before 2020, but Decron managed to obtain a 30-year extension. The deal was pounded out with the California Coastal Commission and the County of Los Angeles and calls for a commitment to a $20 million upgrade and a hike in rents.
With that major achievement under its belt and a desirable investment sales climate in play, Decron felt that its work was done at the Bay Club.
“We tested the market and found there was strong interest in putting the project up for sale, delivered fully permitted and shovel-ready,” David J. Nagel, president and CEO of Decron, noted in a prepared statement. “The market drove values to a level where it simply was not worth taking on the construction risk in completing the renovations.”
A renovation will hardly be money wasted, as the metropolitan Los Angeles apartment market is hot and getting hotter. It’s been a very good few quarters for the Marina del Rey submarket, which experienced the Los Angeles area’s largest year-over-year basis point change in vacancy–a 220-point drop to 4.6 percent–at the close of the second quarter.
It’s a sunny forecast for the Southern California rental market in general. As Harris said, “All signs point to continued positive growth for the foreseeable future.”