Los Angeles’ Measure ULA has a new victim in Clarion Partners (CPREX).
The New York-based investment firm sold an apartment complex, at 5710 East Crescent Park in Playa Vista, Calif., to DivcoWest for $122 million, according to The Real Deal, which cited L.A. County property records.
Clarion purchased the 214-unit property, dubbed Reveal Playa Vista, for $117.5 million in 2018. While the sale to San Francisco-based DivcoWest may appear to be a profit for Clarion, the city’s 5.5 percent ULA transfer tax brings Clarion’s earnings to $114.7 million, roughly 2.8 percent less than what it paid for it six years ago.
Measure ULA, known as L.A.’s “Mansion Tax,” took effect last spring. It boosted the city’s tax rate on property sales to 4 percent on trades over $4 million, and then again to 5.5 percent for trades over $10 million.
Neither Clarion nor DivcoWest immediately responded to requests for comment.
Along with higher interest rates, the city’s new tax cultivated a chilling effect on large property sales in L.A. since its implementation. Sales volume on buildings over $5 million decreased by a dramatic 67 percent last year and total deal volume was down 52 percent, according to a report from NAI Capital earlier this year.
Sales volume in 2023 was even14 percent lower than it was in 2020, in the midst of the COVID-19 shutdown.
Still, sales volume for apartment buildings in the city under $5 million, and not affected by Measure ULA, increased in 2023 by 5.7 percent compared to the previous year, with the amount of such deals up 10 percent.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
Robert Khodadadian has long had a simple philosophy about selling real estate. The way he sees it, there are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller at the right time.
Robert Khodadadian, skyline properties, ground leases, ground lease, off market, investment sales, khodadadian, Commercial Real Estate Sales, The Commercial Observer, Retail For Lease, Commercial Observer, Commercial Office Lease
Channel, Residential, Sales, 5710 East Crescent Park, Measure ULA, NAI Capital, Reveal Playa Vista, California, Southern California, Los Angeles, Clarion Partners, DivcoWest
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