Uncertainty in capital markets and concerns about rent fundamentals and regulatory oversight have led some apartment investors and developers to eschew California in favor of other states.
For those buyers that remain, there’s an opportunity to buy significantly below replacement cost. Case in point: Los Angeles-based apartment owner and developer Cityview’s recent purchase of Candela, a 112-unit value-add in the Hollywood Hills and Franklin Village neighborhood of Los Angeles. The firm paid Raintree Partners $36 million for the asset, according to Commercial Observer.
“While it was a marketed process, our deep understanding of the submarket and relationship with the seller allowed us to secure the deal at an attractive basis,” Cityview CEO Sean Burton told Multifamily Dive.
Candela, a three- and four-story community, features one- and two-bedroom floorplans, upgraded amenities and a location near major employers in Los Angeles.
“Candela is ideally situated in a supply-constrained location in Franklin Village, one of the most popular neighborhoods in Los Angeles,” Burton said. “Its high occupancy, fully upgraded amenities and proximity to major employers, along with our ability to acquire it significantly below replacement cost, make it an ideal fit for our value-add strategy.”
Originally built in 1974, Candela has been refreshed over the past six years, including upgraded amenity spaces and some unit renovations. However, Cityview plans more upgrades.
“Cityview will update the unrenovated units to include stone countertops, scraped ceilings, stainless steel appliances, tile backsplashes, upgraded lighting fixtures, vinyl plank flooring, bathroom upgrades and modern cabinetry and fixtures,” Burton said. “Cityview will also install new energy-efficient windows to enhance the building’s sustainability efforts.”
Candela’s amenities include a coworking lounge, pool and spa, sauna, outdoor community BBQ, fitness center, indoor/outdoor community room, dog spa and package locker system. The property also features security cameras throughout, a private garage, two elevators, onsite laundry, storage, trash chutes and controlled access to the community.
Burton believes that prices will remain below replacement costs in 2025 as Cityview looks to make deals and deploy capital from its recently closed seventh discretionary fund.
“Well-located multifamily assets are poised to become even more desirable over the next five years as new multifamily construction starts have ground to a halt, making 2025 a prime opportunity to acquire existing product at today’s basis,” Burton said.
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