Faulkner Capital Partners Acquires The Baxter in Hollywood for $33.9M

Faulkner Capital Partners, a Rancho Santa Fe-based investment firm, acquired the 86-unit apartment complex located at 1818 North Cherokee Avenue, known as The Baxter in Hollywood, for $33.9 million. That equates to $394,000 per unit, and it was acquired at a 5.5% cap rate.

“We acquired it for less than construction costs. The market has been gaining strength from a fundamentals perspective, and there is positive performance expectations on the horizon,” said Evan Faulkner, founder and chief executive. “We look for a good basis and good percentage return, and we felt that we got both of those on this asset. That’s pretty rare.”

The property was built in 2024 and stabilized in a 90%-95% occupancy range. It was acquired from the builder, who sold it at a discount to construction costs due to extended construction delays and expensive floating rate debt, according to an investment memo. Construction costs have further increased while rents in the area have not kept pace, which has contributed to a slowdown in apartment construction.

As a result, there are fewer units planned and under construction in Hollywood and surrounding areas, and Faulker projects supply to remain suppressed until rents increase to a point that new construction is viable.

“It’s hard not to be a believer in Los Angeles. There are upgrades to the transportation system and major events planned over the next couple of years,” said Faulkner. “The occurrence of the ULA tax disrupted values, but recent operating performance has presented opportunities.”

Since 2005, executives at Faulkner Capital have acquired more than 15,000 apartment units across the western U.S., representing $3.3 billion in acquisition volume. Since 2013, Faulkner Capital Partners has closed and sold 14 different apartment properties.

The seller was represented by Kitty Wallace at Colliers.

Information for this article was sourced from Faulkner Capital Partners.