This Week's LA Deal Sheet
A nursing home bridge loan may not seem to have much in common with a shopping center or office building refi, but they all point to a hot and healthy market for real estate finance.
Yesterday, we chatted with Philip Cohen, president of LA-based Mansfield Equities, a boutique real estate capital advisory firm. He calls the market for both acquisitions and refis aggressive right now as lenders stretch yield and leverage to meet borrowers' needs. The firm arranged a $3.1M bridge loan for a 50-bed nursing home in Culver City that required a two-week close, and was funded by Eagle Finance Group at 70% loan-to-cost. In addition, a $33M refi of a Washington, DC, office building leased by the GSA was secured with a life insurance company. One of the leases will roll during the term of the lease, but Philip notes the lender didn't require any structure around it due to the government tenancy and relatively low leverage. In his off-hours, the dad of four (one boy and three girls, including the little cutie above) started a much needed sports league for kids under 12 in his community.
A $7M refi for Grand Covina Plaza (above), a grocery-anchored shopping center in West Covina, was also with a life company. Located at the southwest corner of Grand Avenue and Covina Boulevard, the property boasts a new 15-year lease with Stater Brothers, which replaced the center's original anchor tenant, Albertsons. Philip says he's seeing more construction lenders enter the market, as well as more development deals. In addition, borrowers are willing to absorb a prepayment penalty to lock in today’s lower rates and avoid a higher interest rate environment. Mansfield is a founding member of the Real Estate Capital Alliance, a capital advisory network with partner offices around the country that report transactions collectively. In 2014, RECA members closed $3.7B in debt and JV equity and are on pace to break $4B this year.
SALES
Vista Modern, a new 34-unit apartment complex in Sherman Oaks (4632-4646 Vista Del Monte Ave) traded to a Japanese construction company for just over $16.5M cash or $485k/unit. The four-story project was built last year and is close to public transportation, freeway access, shopping and entertainment, including the Sherman Oaks Galleria.
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First Industrial Realty Trust acquired First Sycamore Springs in Riverside, a Class-A, 171k SF building that's fully occupied by Big 5 Corp, for $14.8M. The newly constructed facility, 6150 Sycamore Canyon Blvd in Sycamore Canyon Business Park, supports the sporting goods company's existing distribution center, which is also in the business complex. Lee & Associates' Mario Calvillo and Finn Comer repped both sides. The pair also negotiated the 65-month pre-lease with Big 5 on behalf of landlord KB Development.
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New Territory LLC bought a 48k SF industrial building in LA (1151 S Boyle Ave) from D & K Properties for $8.8M. Heger Industrial’s Robert An repped the seller, and JLL's Paul Sablock repped the buyer.
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Evan & MC LLC of Hong Kong bought a 7,327 SF, single-tenant net-leased property occupied by Citibank, 237 S Myrtle Ave in Monrovia, for just under $5.2M cash. Charles Dunn Co's Kyle Gulock and Jason Cope led the effort in repping the seller, an LA-based private investor. Darrell Levonian, Fred Sheriff, Tanel Harunzade and Justin Mendelson also were involved.
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AIR Commercial Real Estate Association established eight AIR/Xceligent advisory boards to monitor the LA metro area's nine major submarkets. According to executive director Tim Hayes, the goal is to achieve a true picture of total gross activity for each previous quarter. The advisory boards are composed of the top landlord brokers in each submarket who come together to update property activity, validating major lease, sale and occupancy activity during the previous quarter. They also will verify whether transactions actually occurred—absorption isn't counted until occupancy takes place, Tim says.
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Joda Investments bought a 16-unit apartment property in Long Beach (1175 2nd St) from a private seller for $3.2M. Stepp Commercial's Robert Stepp and Michael Toveg repped both sides in the off-market deal. Joda Investments plans to completely renovate the face of the property and improve the units, including hardwood floors and new stainless steel appliances. Stepp worked with the buyer to obtain a 2.88%, five-year fixed rate, $2.35M perm loan.
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Berkadia's Mark Ventre closed the sale of a multifamily property in LA, consisting of three storybook-style townhomes and one single-family cottage, to a private investor for $2.3M or $691/SF. The property (2106 S Beverly Glen Blvd) is less than half a mile from Westfield Century City and sold as part of a trust liquidation at a 3% cap rate. The buyer plans to renovate the units as leases turn over.
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American Realty Advisors acquired a fully leased Class-A industrial portfolio totaling 454k SF in Virginia. The portfolio consists of two industrial buildings located within master planned business parks near Dulles International Airport. The buildings are occupied by Unicom Government, Synnex Corp, Cosmos Granite & Marble, and the US Postal Service, among others, and senior director Eric Cannon says in-place rents are currently below market. James Cassidy of DTZ’s DC office repped the seller, an institutional investment management firm.
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Lee & Associates' Scott Romick and Paulette Toumazos closed the $2M sale of a two-story, 7,742 SF office building in Burbank (3111 W Burbank Blvd) near Bob Hope Airport. The buyer and seller are both owner-users. The ground floor of the recently renovated building is fully leased to three tenants, providing the buyer with a revenue stream while occupying the entire second floor.
LEASING
The Swig Co signed a spate of new office leases and renewals at its 617 W Seventh St building in Downtown LA. The new tenants include Officia Imaging, a provider of office equipment and document management software solutions, which signed a 63-month lease for 3,150 SF; and staffing firm Matura Farrington, which signed a 65-month lease for 5,696 SF. Renewals include Systra Consulting, an international engineering and consulting group specializing in rail and public transportation (6,126 SF); Fraley and Associates, a law firm (3,970 SF); and Illusion LLC, a records storage facility (6,987 SF).
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Lee & Associates Ontario's Jeff Smith, Ryan Lai and Austin Hill were named the leasing team for the I-10 Redlands Logistics Center under development at the southeast corner of Lugonia Avenue and Bryn Mawr in Redlands. The property consists of two cross-dock industrial buildings totaling more than 1.1M SF, each boasting 92 dock-high doors. Other features include 36-foot minimum clear heights, 144 trailer parking stalls, and 185-foot secured truck yards. The project is being developed by Hillwood Investment Properties and TIAA-CREF. Completion: Q4.
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Anderson Pacific LLC and Ledcor Properties selected CBRE’s Long Beach Team, led by Richard Rizika, Mitchell Hernandez and Kelly Dent, to handle retail leasing for The Current, a $70M, 223-unit luxury rental tower under construction at Ocean Boulevard and Alamitos Avenue in Long Beach. The 17-story building has reached the halfway mark with completion scheduled for spring 2016. It contains 6,125 SF of ground-floor retail aimed at hip coffee shops and cafes, a prime restaurant, and resident-serving shop space.
FINANCE
Venture West Funding arranged $18.1M in loans to refi three apartment buildings in North Hollywood, Encino and Hollywood. The non-recourse loans are at a competitive seven-year fixed rate with flexible pre-payment penalty structures. Matt Douglas, who arranged the financing through Umpqua Bank, says the borrowers were able to lock in the interest rate in March, when Treasury yields were more favorable.
CONSTRUCTION/DEVELOPMENT
Trammell Crow's County Law Building in Indio is the first County of Riverside facility to achieve LEED Platinum. Sustainable features including extensive sun shading devices, drought-tolerant landscaping, on-site storm drain water retention that will recharge the local ground water system, EV charging stations and recycled content. Carport solar panels will generate 40% of the building's energy use. The three-story, 90k facility provides offices for Riverside County's district attorney, public defender and county counsel, as well as the Indio branch of the County law library. The project, which came in four months early and $2M under budget, was developed under a public-private partnership with the Riverside County Economic Development Agency and the development team. Besides Trammell Crow, the latter included National Development Council, Langdon Wilson and Millie and Severson.
EXECUTIVE NEWS
Michael Brooks joined Pircher, Nichols & Meeks as of counsel in the LA office. His practice focuses on office, retail and industrial leasing on behalf of landlord and tenant clients, including institutional investors, entrepreneurial individuals and entities. He also represents private and institutional investors and owners and developers on acquisitions, dispositions, development and financing of commercial properties.
