Northland, a national real estate private equity firm with $8 billion of assets under management, announced today its California market entry with the acquisition of THEA at Metropolis in downtown Los Angeles (DTLA). Conceived, designed, and built as for-sale condominiums before being converted to apartment homes after construction, THEA was completed in 2020 and is currently stabilized at 91% occupancy. With a $504 million acquisition price, the transaction represents one of the largest single asset market-rate multifamily acquisitions in U.S. history.
Located on 8th Street in the heart of DTLA, THEA is a 59-story, 685-unit Type-I constructed mixed-use asset with 30,000 square feet of ground floor retail. In a Los Angeles market characterized by best-in-class construction and luxury finishes, THEA nonetheless stands apart, boasting: full curtain wall floor-to-ceiling glass construction; gracious 1,038 square foot average unit sizes; luxury condo-spec interior finishes featuring real oak wood flooring, Gaggenau and Miele appliances, European custom designed cabinetry, smart-home features, and gas cooking ranges; and an unprecedented 1.5-acre podium amenity deck with resort-style pool, cabanas, catering kitchen, rooftop dog park, serene urban garden and playground. THEA also features eight penthouse units located on the top two floors, all of which are corner units with an average size of 3,052 square feet, 10-16’ ceilings, and unobstructed 360-degree views.
“In THEA, Northland secured an extraordinary opportunity to acquire the highest quality luxury apartment tower in the United States at a steeply discounted price. The building’s spectacular design, condo execution, and unparalleled amenities offer residents a next-level experience that will hold the test of time,” said Matthew Gottesdiener, CEO of Northland. “Northland believes fervently in the enduring appeal of California and a vibrant future for Los Angeles, and we are encouraged to find these are contrarian opinions well compensated in the market today.”
The purchase price values the multifamily units (97% of total) at $714,000 per unit and $688 per square foot, a 40-45% discount to today’s replacement costs. Northland acquired THEA without any partners, investing through its unique multi-decade-horizon discretionary funds, and financed the purchase with 10-year fixed rate debt. The majority of the equity invested in THEA came from Northland’s successful disposition of Hilands, an 826-unit 1986 Tucson-located property the firm acquired for $21 million in two purchases in 1992 and 1997 and sold earlier in 2022 for $178 million.
“The acquisition of THEA represents an important evolutionary achievement for our firm,” said Gottesdiener. “Over the past decade, Northland has grown from a Class B suburban garden apartment investor with concentrated exposure in Austin, Florida, and New England, to a national owner, operator, and developer, with one of the highest quality diversified multifamily portfolios across now sixteen states.”
Situated within Los Angeles’s Central Business District, THEA is part of a master planned community called the “Metropolis,” a 6.3-acre mixed-use development. Residents are conveniently located only two blocks away from L.A. LIVE, a 5.6 million square foot sports and entertainment complex that encompasses Crypto.com Arena, Microsoft Theater, and numerous restaurants and bars. As the West Coast’s largest economic hub, downtown Los Angeles provides substantial employment opportunities through a wide range of industries including entertainment, professional services, technology, healthcare, and fashion. In addition, the tower is adjacent to Interstate 110 (I-110), providing easy access to the neighborhoods of Hollywood, Beverly Hills, Venice, and Santa Monica.
Northland owns and operates a diversified multifamily portfolio that includes more than 26,000 units throughout sixteen states, and a $3 billion development pipeline with marquee land sites in Boston, Atlanta, Orlando, Denver, and Richmond. Following the acquisition of THEA, Northland’s portfolio now presents an average vintage of 2006, with 30% comprising infill mid-rise or urban high-rise assets.
JLL represented the seller in the transaction and secured the financing on behalf of the new owner. The JLL Capital Markets Investment Sales Advisory team was led by Senior Managing Director John Strauss, Managing Director Peter Yorck, Director Nick Lavin and Managing Director Bryan Ley. The JLL Capital Markets Debt Advisory team was led by Managing Directors Brandon Smith and Annie Rice.