January 14, 2015

This Week's LA Deal Sheet

George Smith Partners arranged a $36M bridge-to-perm loan for Far West Management for the renovation of Villa Del Mar, a four-building, 196-unit apartment complex in Marina Del Rey. The deal shows how older properties are working to compete with new construction.

GSP SVP David Pascale, who secured the financing with principal Steve Bram, tells us a permanent lender is providing a fixed-rate loan for 10 years (5% with two years IO), but is allowing the sponsors to renovate up to 25% of the units at a time, as opposed to having to do a floating-rate bridge loan and a fixed-rate permanent takeout. The unusual structure avoids the risk of higher interest rates when the improvements are completed in 2017. Additionally, the loan is non-recourse, which David calls a key to getting the deal done. The plan calls for a complete gut renovation of all unit interiors, and each building will be vacated in turn while the work is done. Stegeman & Kastner is the construction manager. Given the quality of the asset and the expertise of the construction team, along with sufficient cash flow and reserves, David says the lender was comfortable with underwriting the loan even during the period when a quarter of the units are off-line.

CohnReznick (Field) MLA

Villa Del Mar sits on the waterfront and includes 209 boat slips, David says. He expects the renovated complex, which was 95% occupied, to compete very well with the Marina's newer projects due to its amenities and large units--ranging from 975 to 1,870 SF. The borrowers are the original developers of the property, which was built in the '70s and, like virtually every commercial property in Marina Del Rey, is on a ground lease from LA County. David expects to see more loans of this type taking place, noting the County is extending a whole generation of ground leases right now and requiring the owners to renovate their properties. (GSP did a similar financing for a Marina Del Rey hotel.) Speaking of construction, he's looking forward to his next big LEGO project with his son, who's in fourth grade.

SALES

DCGG Park Plaza LLC formed a JV with Wilshire Park Plaza LLC, owner of the Legendary Park Plaza Hotel, to redevelop the MacArthur Park-area property (607 S Park View St). NAI Capital's Tom Nguyen repped DCGG Park Plaza, which also owns the Hollywood Roosevelt Hotel. Designated an LA historic-cultural monument in the early 1980s, the neo-Gothic style Park Plaza was built in 1925 to house the Elks Lodge, and its indoor pool hosted swimming events for the 1932 Summer Olympic Games. The building was later sold due to declining Elks membership and transformed into a hotel. It's currently vacant and used primarily for movie shoots and special events.

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A JV of AWH Partners LLC and Starr Cos bought the Los Angeles Marriott Burbank Airport, a 488-key, full-service hotel and conference center (2500 N Hollywood Way, adjacent to the Bob Hope Airport). The property consists of two eight- and nine-story towers, plus a conference center providing 46k SF of indoor/outdoor function space. It recently underwent a $10M renovation. HFF's Scott Hall led a team that repped the seller, a privately owned real estate investment company.

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Unison Investment Co snapped up the 20-unit South Orange Grove Apartments in Pasadena (164, 168, 172, 176 and 180 S Orange Grove Blvd) from an entity of City Ventures. The property, which sits along the Rose Parade route, traded for several hundred thousand dollars above its $9.5M listing price. Lee & Associates-LA North/Ventura's Jim Fisher, who repped the seller along with colleague Mike Smith, says the multifamily sector is so active that practically every property commands a premium these days. The property sits on Pasadena's old Millionaire's Row, where business magnates (think Gamble House of Procter & Gamble and chewing gum's Wrigley Mansion) built winter homes. The apartments were built in 1949-50, and were the first multifamily structures on South Orange Grove following a zoning change in 1948.

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M West Holdings bought Orange Grove Circle, a 64-unit apartment complex in Pasadena (435 Orange Grove Circle), from Orange Grove Circle Communities LLC. Greg Harris, Ron Harris, Kevin Green, Joseph Grabiec, Paul Darrow and Michael DiSimone of Marcus & Millichap's Institutional Property Advisors division repped the seller. Marcus & Millichap Capital Corp's Jake Roberts and Anita Paryani structured the debt--a 30-year loan with a five-year fixed interest rate of 3.16%, including five years IO. Orange Grove Circle was designed in 1956 by Langdon Wilson on nearly six acres of the former Adolphus Busch estate on Millionaire's Row.

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A JV between ASB Real Estate Investments and Blatteis & Schnur bought a 2,040 SF, fully leased retail building in Venice (1140-1142 Abbot Kinney Blvd) for $5.8M. ASB, which made the investment on behalf of its $4B Allegiance Fund, now owns six retail properties on Abbot Kinney (recently dubbed America's “coolest block” by GQ magazine) and two others on Santa Monica's Main Street.

LEASES

Beachbody will occupy an entire 133k SF building in the Lantana Entertainment Media Campus in Santa Monica after signing a long-term lease extension and expansion for an additional 41k SF at Lantana South (3301 Exposition  Blvd). The lease, which runs through 2025, is valued at $90M. Industry Partners' Scott Rigsby and Jim Jacobsen repped the landlord, Jamestown. JLL's Tom Turley repped the tenant. Beachbody, a direct marketing firm best known for its infomercials for P90X and Hip Hop Abs, has been a tenant in the building since its construction in 2008.

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Colliers International's Tim Dwight repped the tenants in two leases at the BLAckwelder project in Culver City. XYZ Films leased 3,200 SF of creative office space for its LA production and film distribution operations in a five-year deal valued at $1M. AdKarma, which specializes in digital or online advertising for film and other entertainment-related clients, signed a five-year lease for 2,400 SF. Colliers' latest market survey shows that Culver City, where developers are turning World War II-era buildings into creative office space at affordable rents, tops the list of the most popular Westside submarkets among smaller tech and entertainment companies.

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Telebrands, a direct television marketing company that created the "As Seen on TV" logo, leased a 381k SF industrial building in Jurupa Valley (3198 Dulles Dr) from Golden Solar in a five-year deal valued at $9M. The newly constructed, LEED Silver building boasts 32-foot clear height, 51 dock-high doors, and an ESFR sprinkler system. CBRE's Jim Koenig and Dave Cosani repped the owner. Westgate Industrial Properties' Carol Taubman repped Telebrands.

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King Buffet signed a lease for more than 11k SF at Hawaiian Gardens Town Center in Hawaiian Gardens. Colliers International's Michael Bohorquez and James Rodriguez repped the tenant in the deal, which is valued at $1.7M.

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Chase Bank grabbed a 39k SF corner pad in Gardena (Redondo Beach and Raymond) in a ground lease valued at nearly $3.5M. Colliers International's Juan Jimenez and James Rodriguez transacted the deal.

EXECUTIVE NEWS

Continuing its inroads into the office sector, AIR Commercial Real Estate Association named Cresa SVP Joe Faulkner as its 2015 president and executive chair. The veteran office broker will be the 47th president of the 54-year-old org. Joining him on AIR's executive committee: Joe Lin, Colliers International, Ontario, president-elect/long range planning; Louis Tomaselli, JLL, Irvine, vice president/MULTIPLE director; and Jeff Puffer, Delphi Business Properties, Van Nuys, secretary/treasurer/budget and finance.

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Charles Dunn Co named former Newmark Grubb Knight Frank managing director Barry Rothstein as managing director in the Century City office. He'll focus on the San Fernando Valley, which the brokerage firm has targeted for growth. Barry, who's done more than $450M in transactions over his career, is a longtime Valley resident.

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Chase (NoFees) LA
Downtown Long Beach (2billion) LA
Colliers (Jan2015)LA
Arent Fox (REI2) LA
Bisnow (Writers-Stop)
CohnReznick (Field) LA
Bisnow (RawSpace-Crowd)
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