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Real Estate Bisnow
The largest commercial real estate publication in the United States.
   
July 3, 2012 
 
 
 
Walker LTile LA
Resmark's Big Gamble

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The Avenue, Resmark Apartment Living’s luxury residential rental development in the heart of Hollywood, has hit the 70% leasing mark six months after opening. It's the company’s first development done on its own, but the road getting there was filled with potholes.
 
The Resmark Cos chairman Rob Goodman and Resmark Apartment Living COO Ziv Cohen tell us The Avenue was planned as units for sale until the market collapsed and its partner on the project, John Laing Homes, filed for bankruptcy. “We were sitting on a half-built, busted condo deal” with no debt but a lot of equity, says Rob. (They're also sitting on a lot of M&Ms we'd like to get our hands on.) The company decided to double down, buying the construction loan back from the bank group at a significant discount, and securing a new construction loan with US Bank. Resmark ended up re-starting construction in summer 2010 and took 18 months to complete. The company also made the decision to upgrade the building.
 
Reznick (Client) MLA
Ziv, pointing to a photo of his son’s soccer team, tells us Resmark established the apartment division in 2010. It has two distinct businesses: developing on its own behalf, and providing equity to apartment developers in select markets in the Western US (SoCal, NorCal, Seattle, Phoenix, “and if we find the right opportunity, Las Vegas”), primarily through JVs. The apartment division is also leasing up the 125-unit Union Place in Placentia. It’s partnered with ColRich on two projects totaling 427 units that start vertical construction this month in San Diego’s Eastlake community next to the US Olympic Training Center (which should be empty with everyone over in London, except for those who missed the bus), and with Archstone on a 157-unit project in Santa Clarita, on track toward its goal of doing 1,500 to 2,000 units per year.
 
Office Moving 2012 MLA
Resmark's rental business began with a $275M capital commitment from CalPERS. The Resmark Cos, which includes the Land and Housing for-sale residential division, was formed in 1995, part of a “second wave” of partners on a housing program started by CalPERS in 1992. The company began with a modest allocation of $60M to provide equity to land developers, just in California. That was followed by a $100M commitment, which has since been extended and expanded into a $540M allocation with a broader, national platform. The company decided to focus on vertical JVs with quality homebuilder partners—it’s got 22,000 homes under its belt but never built a single house. Rob notes it’s a revolving equity commitment. “We’ve turned our capital more than three times already” on some 120 investments in for-sale housing.
Rob points to a basketball signed by Kareem Abdul-Jabbar, Magic Johnson, James Worthy, and Michael Cooper. Toronto native Rob and his wife relocated from Canada in their mid-20s and raised their three children in SoCal. Ziv, born and raised in a suburb of Tel Aviv, came to the US to get his MBA at Pepperdine after retiring from the Israeli military as a major.

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DEXUS CLEARS THE DECKS
 
It may not be an Australian walkabout, but it’s certainly something to talk about: the largest industrial portfolio sale this year. The Aussie property firm DEXUS sold its 16.7M SF US central portfolio to affiliates of Blackstone for $770M. We chatted with DEXUS’ managing director of US investments Bruce McDonald, who tells us the majority of the 68 assets were acquired in 2004, but DEXUS developed three Whirlpool distribution facilities itself. “They were the trophy properties” anchoring the portfolio. Totaling 3.6M SF, the buildings were built in 2008-’09 in Atlanta, Orlando, and Columbus.
 
Bruce, here with managing director Bryan Bentrott, says the company was hampered by being in too many markets. Properties were spread throughout 10 states “in areas that we couldn’t concentrate and grow in.” (They finally decided to put that rock star life aside and settle down with the right city.) The sale leaves DEXUS with 24 industrial assets valued at $550M on the West Coast, and the company will focus its capital and energy on growing its portfolio in Seattle, LA, and the Inland Empire. DEXUS will have nearly 1M SF of new development in SoCal next year and is entitling two developments, which it plans to build in 2013: a 260k SF Class-A distribution building in La Mirada and a 600k SF building in Colton.
 
Have a safe and sane Fourth! Julie@bisnow.com.
 
 
 
 
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