Northland buys the tallest apartment tower in Los Angeles for $504 million
Newton, Mass.-based Northland made a strong entry into the California market this week by buying THEA in Metropolis, the 59-story luxury apartment building in downtown Los Angeles that is the tallest building rental of DTLA.
The US subsidiary of China’s Greenland Holding Group sold the building – which opened in 2020, the fourth tower in Greenland’s massive Metropolis development in DTLA – for a record $504 million, which was significantly lower than the group asking price of $695 million.
Greenland completed a hotel and two condo towers as part of the master-planned Metropolis development and originally planned THEA as a condo tower, but decided to offer the building’s 685 units for rental and converted the condos into apartments when the building was completed in 2020.
Metropolis is near LA LIVE, a 5.6 million square foot sports and entertainment complex that includes the 7,100-seat Microsoft Theater and the Crypto.com Arena, home of the NBA’s Los Angeles Lakers and Los Angeles Clippers. , the NHL’s Los Angeles Kings and the WNBA. Los Angeles Sparks.
According to a Wall Street Journal report, Northland said the purchase price represents a 40-45% reduction from the current replacement cost. The WSJ said the original asking price 18 months ago of $695 was still below the development costs Greenland was absorbing.
Northland, which owns and operates 26,000 multifamily units in 16 states, financed the acquisition with 10-year fixed rate debt. The majority of the equity came from Northland’s sale of an 826-unit property in Tucson that sold earlier this year for $178 million.
“With THEA, Northland has secured an extraordinary opportunity to acquire the highest quality luxury apartment tower in the United States at a deeply discounted price,” said Matthew Gottesdiener, CEO of Northland, in a statement.
“Northland believes fervently in California’s enduring appeal and vibrant future for Los Angeles, and we are encouraged to see that these are well-compensated contrary views in the marketplace today,” Gottesdiener said.
The sale of the 59-story residential tower is the latest in a series of asset sales by Chinese developers who have come under pressure from the Chinese government to reduce their debt load.
Chinese companies have sold a total of nearly $24 billion worth of U.S. commercial properties since 2019, according to MSCI Real Assets.
In September, China-based Dajai Insurance Group released three high-profile resort hotels in the United States, targeting a combined selling price of $1.3 billion. Two of the assets are Four Seasons resorts – in Jackson Hole, Wyoming and Scottsdale, AZ – and the other is the Montage, a resort in Laguna Beach, California. Bofa Securities and Eastdil Secured market the hotels.
All three properties are part of Dajai’s Strategic Hotels & Resorts portfolio, which includes 15 luxury resorts and hotels in the United States, including the JW Essex House overlooking Central Park in Manhattan and InterContinental hotels in Chicago and Miami.