The Location
East Hollywood sits between Los Feliz, Koreatown, and Thai Town, zoned R3-1 on a 19,930 SF lot about a block north of Beverly Boulevard. The land alone is worth 3-4M and was previously trading at over $300/SF.
The Setup
626 N Wilton Pl is a 4-story, 26-unit, 130 rooms estimated.
The building was purpose-designed for co-living: 23 units at 5 bedrooms averaging 1,439 SF, and 3 units at 6 bedrooms averaging 1,595 SF.
What an Operator Sees
This is the kind of deal where the 26-unit count hides the potential.
Category paid $12M, or just $267/SF, for essentially new 2024 product. But I think the more interesting number is the co-living play. There are at least 130 rentable bedrooms, putting them in at roughly $92K per room.
At around $1,400 a room, you're looking at roughly $2.2M of potential gross rent at full occupancy. Even after accounting for the heavier expense structure that comes with furnished co-living, the basis gives them a lot of room.
The play looks pretty simple to me: buy new product at a distressed basis, stabilize 130+ individual income rooms, get a great NOI, then refinance against the stabilized value.
If they can eventually justify something around a $20M valuation, they will have created roughly $8M of value over their $12M purchase price. That's why this deal caught my attention. They didn't need to build it. They bought it at a basis that may be very difficult to recreate.
Property and transaction data: CoStar Research.