Investor Acquires Historic Los Angeles Multifamily Portfolio: A K2Investments Analysis

The Picadilly, one of five pre-war multifamily properties recently acquired by Concord Capital in Los Angeles.

At K2 Investments, we're always interested in transactions that reveal unique

investment strategies and highlight the enduring value of specific asset types. The

recent acquisition of a five-building, 537-unit multifamily portfolio by Concord Capital

Partners is one such deal. This transaction offers valuable insights into the Los Angeles

market, where historic properties are becoming increasingly attractive.

The deal, valued at $79 million, involved a collection of "pre-war" apartment buildings in

Hollywood and Koreatown. These properties, built in the late 1920s, are more than just

buildings; they are architectural gems that offer a glimpse into Los Angeles's rich

history.

Why These"Architectural Gems" Are a Smart Investment

The purchase of this portfolio, which includes The Fontenoy, The Langham, The Sir

Francis Drake, The Piccadilly, and Park Wilshire, highlights several key investment

trends we’ve been tracking:

Scarcity and Intrinsic Value: Pre-war architecture is rare in Los Angeles. The

unique character, ornate details, and cinematic quality of these buildings make

them irreplaceable.

The Sir Francis Drake was designed by Edith Northman, one of Southern California’s earliest female architects

Concord Capital's CEO, Reuben Robin, noted that these

properties hold "intrinsic value" and we agree. In a market where high

construction costs and strict zoning make new development difficult, acquiring

existing, architecturally significant assets is a strategic move.

Resilience and Stability: These properties have a proven track record, having

survived nearly a century of market cycles. Their location in central, dense

neighborhoods like Koreatown and Hollywood ensures consistent demand. While

many units are subject to rent stabilization, which can present operational

complexities, it also provides a stable tenant base and predictable income

streams over the long term.

Prime Locations: All five buildings are situated in highly desirable, centrally

located neighborhoods. Koreatown is known for its vibrant community and

density, while Hollywood is a global entertainment hub. The deal for Park Wilshire

on Wilshire Boulevard, in particular, demonstrates the appeal of hybrid assets on

major urban corridors.

The Park Wilshire is the largest of the properties acquired.

Market Context: Los Angeles Multifamily Trends

The deal takes place against a backdrop of interesting market dynamics in Los Angeles

multifamily real estate:

Rebounding Sales Volume: According to CoStar data, multifamily property

sales in Los Angeles have rebounded significantly. The market saw nearly $7

billion in sales over the past year, a substantial increase from the $5 billion a year

prior. This signals a renewed investor appetite for the region.

Slowing New Construction: The number of new units under construction in Los

Angeles has dropped by 20% over the last year. This reduction in new supply

makes existing, well-located properties even more valuable.

Rental Market Performance: While renter demand slipped slightly in the most

recent quarter, causing the vacancy rate to rise to 5.3% from 5%, the market

remains robust. Annual rent growth was 0.7%, slightly slower than the national

average but still positive.

Challenges and Opportunities

The acquisition is not without its challenges. The Park Wilshire building, for example,

requires a seismic retrofit, which adds to the capital expenditure for the new owner.

However, as noted by Colliers Vice Chair Kitty Wallace, the deal demonstrates how

investors are willing to navigate these complexities to acquire rare, high-quality assets.

This acquisition is a perfect example of a strategic, long-term investment in a market

with strong fundamentals. The portfolio’s historic charm, prime locations, and

predictable income stream make it a compelling case study. At K2 Investments, we

believe that understanding these nuances is crucial for identifying opportunities that

offer both financial returns and lasting value.