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Bay Club Sold

Sep 28, 2012

MARINA DEL REY CA, October 10, 2012 – Decron Properties Corp., a diversified real estate investment, development, and management company headquartered in Los Angeles, sold the Bay Club Apartments and Marina to Archstone for $43,950,000. Situated in the heart of Marina Del Rey, the Bay Club is a 167,000 square foot coastal multifamily complex comprising 205 units, 207 boat slips, and 11 end ties. The property sits on a leasehold from the County of Los Angeles.

The Bay Club is a truly unique asset, located in Los Angeles’ most coveted coastal community of Marina Del Rey and with its combination of apartment units on the water and lucrative boat slips.

“We’re sad to let it go. The Bay Club has been a crown jewel in our multifamily residential portfolio for many years,” said David J. Nagel, President and CEO of Decron Properties Corp. “But at the same time, selling it now made a lot of sense for our investors.”

Decron bought the Bay Club back in 2005 at a discounted cap rate due to the limited term left on the leasehold. The purchase and eventual sale of the Bay Club followed a tried and true business strategy for Decron, where it has increased value through its successful entitlement efforts.

Decron acquired the asset with less than 15 years left on the leasehold. It worked extensively with the California Coastal Commission and County of Los Angeles to secure a 30 year extension, which came through due to its willingness to increase the percentage rent and invest in excess of $20 million to renovate the project. The developer then drew up plans for a renovated state-of the-art marina and designer upgrades of the apartment units and common areas. Tom Schiff, Executive Vice President and General Counsel at Decron Properties Corp., worked diligently with the coastal commission and county officials to secure the permits and plan approvals.

Greg Harris, of Institutional Properties Advisors (IPA), who represented the seller and buyer, along with Kevin Green and Joseph Grabiec, both directors at IPA, were selected to market this rare redevelopment opportunity.

“Decron did a tremendous job in preparing the property for sale. Post-renovation, Bay Club Apartments and Marina will be positioned to compete with the top echelon of Southern California’s coastal assets,” said Harris.

“With the acquisition of Bay Club Apartments and Marina, Archstone has further expanded their portfolio in one of Los Angeles County’s most coveted markets,” adds Green.

Unaccustomed to dispositions, Decron typically holds assets for the long term and rarely sells. Rising rents on the Westside and the built-in repositioning program, however, helped generate numerous and attractive offers. “We tested the market and found there was strong interest in putting the project up for sale, delivered fully permitted and shovel-ready,” said Nagel. “The market drove values to a level where it simply was not worth taking on the construction risk in completing the renovations.”

Decron Properties Corp. currently owns and manages over 5,000 residential units with another 460 units planned for development over the next three years. It also maintains and operates a sizeable portfolio of 3.5 million square feet of commercial office and retail space located throughout California. Despite its considerable commercial holdings, Decron has specifically focused its recent growth on its multifamily platform including apartments and broken condos. It has the ability to pay all-cash and close quickly.

As the real estate investment and development arm of the Nagel Family Trust, Decron has been an active owner and investor in California real estate for over 55 years. With assets in excess of $1.5 billion, the current portfolio includes retail centers, office buildings, multifamily apartment buildings, and marinas. Decron owns and operates over 7 million square feet of commercial and residential property in 55 different projects and communities.