May 29, 2019 – Colliers International has negotiated the sale of The Gershwin Apartments on behalf of Massie Capital Management to a locally-based investment management and development firm. Kitty Wallace and Kalli Knight represented both the buyer and seller in the transaction. The buyer secured the deal with a strong, all-cash offer including a sizable upfront deposit and expeditious close. Total consideration was $46 million.
Built in Hollywood during the era of The Roaring ‘20s as the St. Francis Hotel, the five-story, red-brick building has since become a landmark, 172-unit mixed-use community. The well-preserved property combines 163 units comprised of a mix of micro lofts, studios and one-bedrooms units, all located on floors above 10,565 square feet of ground-floor retail as well as nine adjacent one- and two-bedroom bungalows.
“The strength of Southern California’s multifamily investment market has largely been defined by the Hollywood market as of late” said Wallace. “It’s an exciting time to be in Hollywood as investors pour billions of dollars to make their mark in revitalizing this iconic neighborhood.”
According to Wallace, great efforts have been made over the years to restore the property to its original splendor and transform The Gershwin into an “iconic and amenity-rich community with a boutique hotel vibe.”
Rental rates in place at the time of sale were substantially below market rate and may provide an opportunity for the buyer to achieve considerable rental upside, Wallace noted.
“Along with plans to remodel the remaining original units to capture top-of-market rates,” she added, “further value still may be added by completing an envisioned rooftop deck with unobstructed panoramic views of the Hollywood Sign, Griffith Park and downtown Los Angeles.”
Located at 5533 Hollywood Blvd., The Gershwin benefits from its location in a pedestrian-friendly mass transit-oriented neighborhood that includes immediate access to the area’s major employment and entertainment hubs of Hollywood, Universal City, Burbank, Glendale, downtown Los Angeles and West Los Angeles. The property is directly across the street from the Hollywood/Western Metro Red Line Station, within walking distance to ample amenities and is surrounded by iconic Los Angeles destinations.
Hollywood’s multifamily market continues to post some of the highest apartment occupancy rates in Los Angeles County and the nation, maintaining an average rate of 96.4% over the past five years, according to a study undertaken by The Reis Group. Fueled by record demand, rental rates have continued their remarkable upward climb and are forecasted to experience the third highest rent growth in the Los Angeles Metro over the next five years at 4.0%.