Greystar buys LA apartments for $178m – Exclusive

Capital for the two purchases came from the firm’s latest value-added fund, Greystar Equity Partners IX.

Greystar Real Estate Partners has purchased two Los Angeles-area multifamily properties for $178 million in separate transactions, the firm told PERE Friday.

In the first deal, Charleston, South Carolina-based Greystar bought Gardens at Wilshire Center, a 195-unit multifamily community located at 3675 Wilshire Boulevard in the Koreatown neighborhood. In the second acquisition, Greystar purchased Villas at Rancho Palos Verdes (pictured), a 215-unit multifamily community located at 6600 Beachview Drive in Ranchos Palos Verdes.

“Ground-up development in Los Angeles can be a challenging proposition due to a shortage of developable land coupled with a lengthy entitlement process and escalating costs,” Kevin Kaberna, Greystar's senior managing director of investments, told PERE. “While developers can unlock significant value by successfully delivering new product in LA, it's these same high barriers that help make LA a top investment market for Greystar. We tend to gravitate towards opportunities located in higher-barrier pockets of LA such as Koreatown because of its attractiveness from an acquisition perspective. With a cost basis below replacement costs, we are able to execute our value-add repositioning strategy while still targeting rents that are at a discount to new construction – and thus more attainable for the average renter.”

Capital for the purchases came from Greystar Equity Partners (GEP) IX, the latest in the firm's series of value-add vehicles that are invested in multifamily assets across the US. PERE previously reported that the fund launched in October with a $1 billion target. The firm held a first close in December on $200 million, according to a filing with the US Securities and Exchange Commission, and PERE understands that the firm is seeking to wrap up fundraising this summer. Investors in the latest fund include the Ohio Police & Pension Fire Fund, which allocated $50 million, and Kansas Public Employees Retirement System, which committed $40 million, according to PERE research.

The firm finished investing the $800 million predecessor vehicle, GEP VIII, in March, PERE reported.

Greystar has about $14 billion in assets under management and oversees more than 10,000 apartment units in the Los Angeles metro area.