The largest multifamily development portfolio in Santa Monica is now on the market.
WS Communities’ 23-parcel portfolio, which is entitled for the development of over 2,100 units and more than 200,000 square feet of commercial space, is up for sale and prospective buyers have the chance to instantly become the largest multifamily landlord in Santa Monica with nearly 7 percent of the city’s market-rate inventory.
Ari Kahan of California Landmarks Group, a real estate development company located on the Westside said the entitled projects are appealing to buyers because they are close to major jobs and there could be benefits to the neighboring areas in the current economic climate as new residents would bring more customers to local stores.
“The opportunity to bring 2,100 units to Downtown Santa Monica is certainly a once in a lifetime opportunity, and one of the better things to happen to the cities of Santa Monica and Los Angeles as a whole,” he said.
Robert Wasserman of Wasserman Commercial Real Estate said the proposed buildings will be sought-after by residents due to the City’s reputation.
“When these high-quality products are delivered fully-developed, it will pull up multi-family market values all over the city,” he said.
He said the existing entitlements will be particularly appealing to potential buyers as they will be able to avoid the sometimes lengthy approval process.
He said Santa Monica’s entitlement and building approval process keeps many developers out of the area because it takes patient people and patient money to successfully go through the process. Some of the properties in the sale are particularly valuable to the buyer as they were approved under older, more lax rules and have a reduced affordable component compared to new projects.
“The opportunity to acquire high-quality products for a long term hold in one of the most sought after real estate markets in the county makes this an extraordinary opportunity, so finding a buyer will not be an issue,” Wasserman said.
City Hall said it will enforce any and all requirements in place for the as-yet built units.
“The City of Santa Monica is reviewing all entitlements for [WS Communities] now for sale to ensure both [WS Communities] and any possible buyer are fully aware of all obligations attached to each of the properties, including significant affordable housing obligations. Certificates of occupancy for any of these properties would require that the affordable housing and other obligations be satisfied,” said City spokesperson Constance Farrell.
WS Communities was created as a spin-off of Neil Shekhter’s NMS Properties in 2017. While NMS was mired in a legal fight with a former partner over ownership of several apartment buildings, WS Communities was able to secure several additional projects including six micro-apartment developments in the Downtown area.
Those properties prompted the City to temporarily ban small apartment developments but after WSC threatened a lawsuit, the City allowed the projects to move forward with a stipulation that the company would not pursue additional micro-apartments in Santa Monica.
The buildings at 1323, 1338 1415 and 1437 5th St., 1437 6th St. and 1557 7th Street are all in a four-block radius downtown and will total 363 units between 219 and 373 square feet.
Kahan praised WS Communities for persisting through the Santa Monica development process.
“They’ve accomplished what very few developers are willing to go through, which is developing a new product in Santa Monica,” he said.
Kahan said he believes the portfolio will most likely go to a real estate investment trust like PIMCO, who can place this in their build to core fund because their cost of capital is exponentially lower than most other players out there.
WSC Communities could not be reached for comment by print deadline Friday.
Brennon@smdp.com
