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Rare rent-controlled Hollywood apartments sell for more than double price of decade ago

Garden-style 236-unit complex sells for $44 million
The Marquee, a two-building complex in North Hollywood, is made up of mostly studio units. (CoStar)
The Marquee, a two-building complex in North Hollywood, is made up of mostly studio units. (CoStar)
CoStar News
December 6, 2024 | 10:40 P.M.

In one of the few rent-controlled multifamily deals to close in Los Angeles this year, a North Hollywood apartment complex has traded in an off-market transaction for more than double its price just a decade ago.

Beverly Hills-based Post Investment Group and Denver-based Walker & Dunlop Investment Partners purchased The Marquee, a 236-unit, garden-style multifamily property in North Hollywood, California, for $44 million.

The deal is a notable one considering "some investors have reservations about rent control limiting landlords' ability to raise rents when operating expenses have risen considerably," said Ryan Patap, senior director of market analysis for Los Angeles at CoStar.

The 4.5-acre property at 12300 Sherman Way is located in Studio City-North Hollywood, a neighborhood that has outperformed the broader Los Angeles market in the past two years, according to CoStar data.

Built in the 1960s, the Marquee was last renovated in 2010. (CoStar)

The complex was built in 1965, and therefore subject to Los Angeles rent control laws that cap annual rent hikes at around 4%.

The sale represents the only rent-controlled multifamily property with more than 120 units to trade in the city of Los Angeles in the past year, according to Adrienne Barr, senior managing director at Berkadia Los Angeles, who represented the buyers in the deal.

“We were able to achieve something that no other broker has done in a tough market,” Barr said in a statement.

The rarity of the transaction underscores the difficulty of closing multifamily deals in Los Angeles, where an entertainment industry slowdown, high cost of debt, and outmigration have stifled investor activity.

The most recent similar rent-control deal was in March, when California Landmark Group sold the nearby 120-unit LP by CLG at 349 La Fayette Park Place to the Housing Authority of the city of Los Angeles for $43 million.

Berkadia declined to name the seller in The Marquee deal, though records indicate MG Properties Group purchased the property for $27.5 million from Cirrus Asset Management in 2014. The seller cited on the most recent deed is a California limited partnership called MG Marquee.

MG Properties did not immediately respond to a request to comment.

For the record

Senior Managing Director Adrienne Barr and Director of Transaction Services Nancy Badzey of Berkadia Los Angeles led the transaction. Senior Managing Director Tim Leonhard and Associate Director Jeremy Kanter of Berkadia Dallas and New York, respectively, secured $32.9 million in acquisition financing on behalf of the buyer.

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