Forest City Sells Stake in L.A. Apartment Complex to JV Partner CalPERS
- Feb 02, 2011
Six years after developing Met Lofts in downtown Los Angeles, Forest City Enterprises Inc. has completed the sale of its 50 percent interest in the 264-unit apartment property, which is valued at $73.6 million, to its joint-venture partner, California Public Employees Retirement System. Forest City and CalPERS completed construction of the multifamily asset in 2005 at a cost of about $60 million.
Designed by noted architectural firm Johnson Fain, the eight-story structure was developed to capitalize on the much-discussed renaissance of Downtown Los Angeles. Met Lofts sits in a coveted location surrounded by such popular destinations as the Staples Center sports and entertainment arena and the L.A. Live entertainment district, home to the Nokia Theatre. The property is strategically located a stone’s throw from the 110 and 10 freeways, two vital thoroughfares, and is within a few blocks of the city’s blossoming Metro rail network.
The Los Angeles apartment market, which did not escape unscathed during the economic downturn, is making quite a comeback, and the Downtown submarket is doing its part. According to a fourth quarter report by Marcus & Millichap Real Estate Investment Services Inc., an increase in office-using job growth will push the vacancy rate back down to “historical levels” by the end of summer.
Even though the local multifamily outlook appears likely to get even rosier as 2011 unfolds, Forest City asserts that the timing was right to sell its stake. For one thing, the company may have gotten an offer it couldn’t refuse. “The 4.5 percent cap rate was very attractive,” a senior Forest City official explained on Wednesday. “It was certainly a return that demonstrates the value we created in the property. It’s evidence of the quality of the asset and the strength of the market.”