Private California firm snaps up 257-unit Palos Verdes complex for $127 million

A public REIT has sold one of the few large apartment complexes in an upscale coastal Los Angeles neighborhood to a private equity firm that plans to renovate the rooms and add resort amenities to boost rents.

Essex Property Group sold the 257-unit Highridge Apartments in Rancho Palos Verdes to The Bascom Group for $127 million, or $493,163 per unit.

The sale marks the fifth most expensive multifamily deal in Los Angeles in the past year, and marks a major price reset for the property, built in 1972 at 28125 Peacock Ridge Drive. San Mateo-based Essex bought the property in 1997 for $25.3 million and spent $17 million on renovations in 2017.

The deal represents a "truly generational opportunity" for Irvine-based Bascom Group to buy one of only three multifamily properties with more than 100 units in upscale Rancho Palos Verdes, according to Joe Ferguson, the firm's acquisitions manager.

"Few opportunities of scale ever arise in coastal Southern California, and nearly none in Rancho Palos Verdes," Ferguson said in a statement.

Rancho Palos Verdes is part of the Beach Communities market in Los Angeles, where multifamily rents are 25% higher than the market average and multifamily property sales are priced at a 20% premium because of good schools and seaside views, according to CoStar research.

The trade comes at a time when multifamily sales volume is up 24% year over year in Los Angeles, to $6 billion, outperforming a 22% increase nationwide, according to CoStar data. Meanwhile, the number of new multifamily units under construction across greater Los Angeles is down 19% and renters have leased 11,000 more units in the past year than they have vacated, leaving room for rents to grow.

A tight market

Highridge Apartments is one of the nicer apartment complexes in the Beach Communities, with units that are 21% larger than others in the market, according to JLL.

During the past 10 years, developers have demolished more apartments in the Beach Communities area than have been built, according to Ryan Patap, CoStar senior director of market analytics for Los Angeles.

Almost all apartments in the wealthy coastal area are older and lower tier, despite being surrounded by some of the most expensive single-family homes in greater Los Angeles, Patap said.

The deal's price tag is about 37% higher than the greater Los Angeles multifamily average of $360,000 and is above the Beach Communities average of $448,000 per unit, according to CoStar data.

Since 1996, Bascom has partnered with private and institutional capital to acquire 96 multifamily properties and 15,948 units across Southern California, with 40 of those properties and 6,092 units located in Los Angeles County. The firm is buying properties for its latest value-add fund.

Meanwhile, Essex Property Group, one of the largest owners of apartments in the U.S., reported net income growth of 83% year over year in 2024 thanks in part to asset sales.