In yet another sign of the changes afoot in Hermosa Beach’s real estate market, a 168-unit apartment complex known as the Gallery was recently purchased by a Chicago-based real estate investment trust known as Equity Residential.
According to the real estate Web site GlobeSt.com, the firm purchased the property located at 414 Second St. from Playa Pacifica, Ltd. for $64.6 million. The deal, which closed late last month, included a $34 million loan from Capmark, a real estate financial company.
A spokesman for Equity Residential spoke briefly with The Beach Reporter to comment on the firm’s latest acquisition. “We very much like the market,” said assistant vice president Marty McKenna.
The acquisition is the second investment by Equity Residential within Hermosa Beach this year. In June, the company purchased the 285-unit Playa Pacifica complex located at 415 Herondo St. for $68.5 million. The two properties are right next door to each other. “Obviously that was part of the attraction for us on the Gallery property,” said McKenna.
Unlike Equity’s acquisition of Playa Pacifica, which saw the firm spend approximately $20,000 to $25,000 per unit on improvements, no upgrades are planned for the Gallery. “The Gallery was built in 1971, but it was recently renovated and upgraded,” said McKenna.
As with the sale of Playa Pacifica in June, Equity Residential utilized the services of the brokerage firm Marcus & Millichap in its latest deal. “Between these two buildings, they represent 20 percent of the rental units in Hermosa Beach,” said Greg Harris, one of Marcus & Millichap’s vice presidents. “The sale itself was not marketed. It was purchased on an off-market basis.” Harris, who works out of an office in El Segundo, was aided by fellow M&M broker Ron Harris to complete the transaction.
Following the sale, Equity Residential wasted no time in incorporating its newest property into its portfolio. Apartments from both the Gallery and Playa Pacifica are listed on the company’s Web site equityapartments.com. Rents at the Gallery start out at $1,375 per month for a studio and top out at $2,700 per month for a two-bedroom apartment with two bathrooms.
