Firm makes bid for Broadway
A Northern California real estate firm has paid $43 million to acquire a 115-unit apartment building on Broadway in Glendale, ending the troubled tenure of the original owner.
Palo Alto-based Essex Property Trust Inc. announced Monday it bought 416 E. Broadway out of court-ordered receivership. The building was owned by East Broadway Ventures Inc.
Completed in 2008, the building includes ground-floor retail space and 115 residential units that at first were to be sold as condos. But with the real estate market flagging and anemic sales, the building was converted to apartments in January 2009.
The complex is now 93% occupied, Essex spokeswoman Nicole Culbertson said. The retail space is vacant except for the building’s apartment leasing office.
The building could be converted again to condos, Culbertson said, though Essex has no immediate plans to do so.
“That is an option in the future, should the condo market come back,” she said.
A series of legal complaints filed by contractors and subcontractors complicated the transaction, according to lawyers involved in the litigation over 416 E. Broadway.
More than a dozen construction and painting firms filed claims in 2009 against the main contractor, Suffolk Construction Co. Inc., saying they had not been paid for their work. Suffolk filed a claim for $2.7 million against East Broadway Ventures and the financier on the project, Netherlands-based MBO North America Fidelity.
All of those claims were resolved with financial settlements before Los Angeles County Superior Court Judge Laura Matz signed off on the sale last week, said Richard Ormond, the attorney for the court-appointed receiver in the case.
“It was a challenging transaction because of the complexity of dealing with a multitude of liens and status of the parties involved,” Ormond said.
While the building sold for $43 million, Ormond said East Broadway Ventures’ initial investment was about $49 million, plus interest and other costs.
In a statement, Essex President and Chief Executive Keith Guericke said the acquisition fits the real estate investment trust’s strategy of picking up properties in “desirable, supply-constrained markets.”
Essex, with nearly 150 properties in California and Washington State, has spent $584 million to buy 12 apartment or condo complexes in 2010.
“These acquisitions further our strategy to allocate capital to markets we believe will outperform in the coming years as supply pipelines diminish and job growth continues,” Guericke said. “Additionally, these communities have the ability to be converted back into condominiums when the for-sale housing market recovers.”