SANTA MONICA, CA - After undergoing approximately $1.5 million in renovations and upgrades since 2012, the 60-unit apartment building located at 3111 Fourth St. was recently sold to MLT Properties for $26.5 million, or about $440,000 per unit. This sale price places the 43-year-old apartment complex, which stands blocks away from the ocean in the heart of West LA’s booming “Silicon Beach” community, among the ranks of just two other apartment buildings in the area within that size category that have sold for a higher per-unit price. M West attributes its ability to maximize property value and investor returns to tactical execution of a solid investment strategy, high-level asset management, and timely implementation of its disposition strategy within the investment cycle.
At the time of acquisition, Karl Slovin, President of M West, considered 31 Eleven to be an ideal addition to its growing Los Angeles portfolio. Limited development opportunities and high barrier of entry into the Santa Monica market, coupled with the influx of business growth and minimal market vacancy rates created an attractive risk-reward profile for investors. The building’s prior owner self-managed and under-maintained the asset for 30 years, leaving the property and the units, many of which feature ocean views and multiple balconies, in need of cosmetic upgrades and modern amenities. Recognizing the value add opportunity, M West developed a strategy that involved improving the overall aesthetic appeal, modernizing energy efficiencies, and adding desirable amenities to the property.
The renovations and upgrades were part of a larger investment strategy, aimed at transforming 31 Eleven from a complex that achieved rental rates significantly below market into an asset that capitalized on the climbing rates more typical of the Santa Monica area. According to the LA Business Journal, rents in the area rose by 8.5% on average since 2012.
The building now boasts a large Spanish style courtyard, second floor lounge area, community fitness center, and two rooftop decks where residents can enjoy stunning views of Downtown Los Angeles and Santa Monica atop stylish lounge furniture. An additional $1 million afforded system upgrades such as roof replacement, completely new copper plumbing, seismic retrofit, and a comprehensive landscaping transformation.
Upgrades were made to 18 of the 60 units at a cost of approximately $25,000 per unit, and included condo-quality improvements to kitchens such as stainless steel appliances, quartz countertops, modern cabinetry, and high-end vinyl plank wood flooring throughout. Bathrooms were gut renovated with modern vanities and glass enclosed shower/tubs with bamboo style tiles, while bedrooms were equipped with ceiling fans. The remaining units posture the new owner to further increase value and command additional increased rents should it choose to continue with the renovations.
The sale of 31 Eleven comes as another success story within M West’s 20+ year history of identifying unique value add opportunities and delivering maximum investor returns within the Los Angeles markets.