Ground Lease for the Cecil Hotel Hits the Market

Featured image credit: Jim Winstead

It’s hard for Angelenos to remember the Cecil Hotel before the highly publicized death of Elisa Lam. While her drowning in the building’s rooftop water tank has since been demystified to all but the staunchest conspiracy theorists, it held a light to the violent history of the property. Temporary home to notorious serial killer Richard Ramirez and the site of countless suicides, overdoses, and all manner of crime, it’s hard to believe the Cecil Hotel was once noted for its decadent splendor. Its dark reputation is just one obstacle that daring investors will need to overcome if they want a stake in this historical property. That’s right; the ground lease is officially on the market. 

A Tangled Investment Opportunity

At face value, the Cecil Hotel may not be all that different from other downtown listings. It’s a looming 15-story building offering 601 units packed into 159,803 square feet of space. But from there, things get a bit more complicated.

For one, the Cecil Hotel is a designated historical landmark. This means that even if an investor were able to navigate the red tape binding the property (which we’ll get to in a moment), the exterior of the building would need to retain its historically significant appearance. 

Secondly, the building itself isn’t for sale. An investor would just be taking over the ground lease for the Cecil Hotel. This would allow an investor use of the building as well as long-term development which might be a bit hindered by its historical significance. To be clear, this is a ground lease with a lot of life in it. Of the lease’s 99 years, only eight have passed. 

Then, there’s the mysterious hidden price tag to consider. When the ground lease for the Cecil Hotel was listed on LoopNet, it was noticeably done so without an advertised price. One can only speculate that the asking price would turn off all but the most interested investors. In 2023, inspectors assessed the property at $31 million including improvements made by the current ground lease owner. 

The Cecil Hotel as Affordable Housing

But perhaps the most daunting caveat of investment in the Cecil Hotel is its current, protected use as low-income housing. The property has been providing affordable housing opportunities for the formerly unhoused since 2021. To qualify for rental of the majority of the building’s units, applicants must be in the lower 30% of LA’s median income, or come supported by government-backed housing vouchers. While the supportive housing initiative at the Cecil Hotel is privately funded, it is still under government protection. This means any investors picking up the ground lease will need to adhere to those restrictions.   

Perhaps one reason that the ground lease is returning to the market is the current leaseholder’s difficulties in filling vacancies in a property with such an ominous history. Currently, only about 60% of the Cecil Hotel is occupied. While the listing posits that it will breach 80% capacity by the middle of the year, it’s an ambitious goal considering just last summer it was at 50% capacity. 

It May Not Be Ideal But It’s Home

Are a few ghost stories really enough to convince prospective tenants to seek other options? For many people, the Cecil Hotel’s present is of more concern than its past. Documented complaints from tenants and staff alike include matters as diverse as building sanitation, pest control, safety, and slow maintenance response times. 

Though it may not offer the ideal living situation, the Cecil Hotel is still home to a large group of Angelenos who may otherwise go unhoused. According to the chaplain for the building, Reverend Dylan Littlefield, the potential sale of its ground lease has left tenants in a state of alarm. Reverend Littlefield maintains a blog about his time as the Cecil Hotel’s chaplain and details how staff and tenants alike were blindsided by news of the listing. So investors could be taking on an unusual amount of responsibility… and a sense of fractured trust. 

Yet, often the difference between a good investment and a bad investment boils down to a matter of perspective. Is there risk involved in taking over the ground lease for the Cecil Hotel? Oh yeah. But is outside the realm of possibility that the right investor could come along and finally make it work? Stranger things have happened… a lot of them in the Cecil Hotel.