When the Frank’s Camera building at 5715 N. Figueroa St. in Highland Park reopened in February after a lengthy renovation, the owner/developer, Engine Real Estate, intended it to be a gem in its growing portfolio of Los Angeles-based properties.
That was then.
On June 23, Frank’s and two other buildings in Highland Park owned by Engine Real Estate were sold for $23 million, said David Walker, the president of Engine Real Estate, in a recent interview with the Boulevard Sentinel.
In addition to the Frank’s building, the sale includes 5711 N. Figueroa and 5900 N. Figueroa. Altogether, the three buildings house 14 businesses and 12 rental apartments.
Mr. Walker said that the opportunity that presented itself to sell the buildings made more investment sense than holding onto them. Taken together, the three buildings in the package lifted the total size of the deal into the tens-of-millions-of-dollars range that is typical for big real estate investment funds.
As of deadline at the end of June for this issue of the Boulevard Sentinel, the buyer did not yet wish to be identified, said Mr. Walker, and public records on the sale were not yet available. But some of the business tenants in the sold buildings told the paper that they believed the buyer is a real estate investment firm in North Carolina and that the purchase of the buildings in Highland Park is the firm’s first foray into Los Angeles.
What will happen to the buildings’ business and residential tenants?
There are nine businesses in the Frank’s building: Arrive Hospitality, a boutique hotelier; Blind Barber, a barber shop-plus-speakeasy; Chops Meat and Fish market; Dave’s Chillin’ and Grillin’ sandwich shop; In Transit, a travel videographer; Lemon Tree Studio, a recording studio; Otoño restaurant (set to open this summer); Pacific Union International real estate; and Skyline Home Loans. The building at 5711 N. Figueroa houses Afters Ice Cream and Sonomama, a retailer of women’s clothing and art-and-beauty wares. The building at 5900 N. Figueroa houses Kitchen Mouse restaurant, Mr. Holmes Bakehouse and Tinfoil Liquor and Grocery, plus the 12 rental apartments on its upper floors.
The Boulevard Sentinel spoke to the owners or managers at Arrive Hospitality, Chops Meat and Fish, Pacific Union, Kitchen Mouse and Tinfoil. All of them said they had leases in place with renewal options at prevailing market rates. They all seemed comfortable with their situations. “We’re not worried, we have a lease,” said Mitch Durette, the manager at Tinfoil.
As for the residential tenants at 5900 N. Figueroa, their apartments are subject to the Los Angeles City Rent Stabilization Ordinance (RSO), which limits annual rental increases to 3% to 8%. But there is no legal limit on how high the rent can be raised after a vacancy occurs. The RSO also makes it difficult for landlords to evict paying tenants, though in general, tenant advocates say that anti-eviction protections in L.A. are not strong enough.
One thing is sure: The new owners in town are here to make money. And they will need to make a lot of it to justify a $23 million investment.