This Week's LA Deal Sheet
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As competition continues to increase for all real estate lending, the challenge is to make good, solid loans without sacrificing underwriting standards in this frothy lending environment. At least that's what Calmwater Capital portfolio manager Larry Grantham has to say about it.
Recently, we checked in with Larry (shown with the Grantham girls), who tells us the firm provided $93.4M in senior debt this past quarter, bringing its originations for the first half of the year to $255M. The deals reflect a variety of acquisitions and refis by a geographically diverse array of sponsors and assets, representing all four main commercial property types. The largest was nearly $35M for the purchase of a vacant office building in Miami, with the borrower having a significant tenant in tow. Other properties clients acquired in Q2 ranged from a 71-unit multifamily portfolio in Dallas to three Burger Kings in Tucson, AZ. For 2015, Calmwater has set a loan origination goal of $500M.
The firm also provided a $26.2M term loan to refi and renovate a 182k SF, Class-B R&D industrial property in Milpitas (above), which is being done on a spec basis, and $14.5M to refi the 565k SF Metro Centre Towers office complex in Detroit. Larry notes Calmwater was able to increase its annual goal (from the $357M it originated last year) due to new capital, including an equity investment by a top 20 university endowment. The firm is now a nationwide lender. "Two years ago, we couldn't say that." Formerly known as Karlin Real Estate Lending, the firm is primarily backed by Karlin Asset Management, which is headed by president David A. Cohen.
A partnership between Greenlaw Partners and Walton Street Capital affiliates acquired the World Trade Center in Long Beach for $106M. The 27-story office tower contains nearly 575k SF, representing 14% of downtown Long Beach's office market and more than a quarter of the Class-A space. At the time of sale, it was 59% leased. CBRE's Kevin Shannon, who repped the institutional seller along with Michael Moll and Ken White, notes downtown Long Beach is experiencing an evolution similar to that in Downtown LA and other CBDs where new multifamily, hotel and retail is being developed. Long Beach's downtown office market is becoming tighter as older office stock is being converted to residential, he adds.
Tishman Speyer acquired 555 S Aviation Blvd in El Segundo, a single-story, 260k SF office building, with plans to convert the property into a creative office campus. Regional managing director Mark Laderman says the strategy includes new on-site amenities and improvements, such as a fitness center, a café and bicycle storage, as well as landscaped private outdoor tenant areas. Cushman & Wakefield's David Hasbrouck repped the seller.
M West Holdings bought the historic 193-unit Wilshire Royale Apartments, 2619 Wilshire Blvd in the Westlake District of LA, for $32.5M, or more than $168k/unit. Greg Harris, Kevin Green and Joseph Grabiec of Marcus & Millichap's Institutional Property Advisors division advised the seller, a private investor, and also procured the buyer. Built in 1927 as the Arcady Apartment Hotel, the Art Deco building includes 9,269 SF of ground-floor retail. M West president Karl Slovin says the company intends to bring back the building's 1920s neoclassical charm and elegance to attract the growing Millennial renter population. Marcus & Millichap Capital Corp's Anita Paryani and Jake Roberts arranged acquisition financing.
Berkadia's David Harrington represented a 1031 exchange buyer in the purchase of 14725 Titus St, a 44-unit apartment property in Panorama City. The property, of which 73% are two- and three-bedroom units, sold for nearly $6.8M.
Engine Real Estate LLC bought a 32-unit multifamily property in Koreatown (932 Irolo St) from a private buyer for $4.9M. According to Charles Dunn Co's Janet Neman, who repped both sides along with Bryan Glenn, the 1927-vintage property was fully renovated by the seller. The buyer plans to make additional small improvements that include new amenities, and improving overall property management and operations. The property is north of Olympic Boulevard, adjacent to the Seoul International Park.
126 Co bought a six-unit apartment property in Santa Monica (1820 12th St) from a private investor for $2.5M or $417k/unit. The closing cap rate was a low 3%. Stepp Commercial's Kimberly Roberts Stepp, who represented the seller, notes the building is on a revitalizing street with new condo developments nearby. MYI Inc repped the buyer.
Dovetail Furniture & Design bought an industrial building in the South Bay (540-544 132nd St) from AGD Properties in a $1.5M investment acquisition. The building, which contains nearly 11k SF, is occupied by metal forming company Mark IV Metal on a five-year lease. The Klabin Co/CORFAC International's Matt Stringfellow and Courtney Bell repped the buyer. CBRE's Greg Dyer and Brad Hoy repped the seller.
Kitchen Bath Collection, a manufacturer and importer of designer kitchen, dining and bathroom products, signed a long-term lease for more than 48k SF of HQ-quality light industrial space in Torrance for an expansion and relocation. The building (2860 California St) features 10k SF of office space, a portion of which will be showroom. KBC will employ about 25 people at the site. The Klabin Co/CORFAC International repped both sides—Matt Stringfellow and Courtney Bell for the tenant, and Todd Taugner for the landlord, Karney Management. The 10-year lease was valued at $3.2M.
Venture West Funding's Jean-Marc Herrouin arranged $10.2M through Farmers & Merchants Bank to refi Pride Center, a 185k SF shopping center at Victory Boulevard and Fallbrook Avenue in Woodland Hills. The center's eight tenants include CVS, Tuesday Morning and Harbor Freight Tools. Jean-Marc says the borrower was able to refi the existing debt plus cash out, even though anchor tenant Albertsons is currently dark and available for sublease.
RealtyMogul.com, an online marketplace for real estate investing, raised more than $5M for the acquisition of two hotels. One of the properties is a former Holiday Inn in Joplin, MO, that's being renovated and rebranded as a DoubleTree by Hilton. The other is a 96-room Courtyard by Marriott in Memphis, TN. Conor Acquisitions, a Florida-based owner and operator of hospitality properties, is the sponsor of both transactions. RealtyMogul.com CEO Jilliene Helman says the transactions mark the company's first two JVs with Conor, as well as RealtyMogul's first hotel investments in the two states.
Marcus & Millichap promoted two LA-area multifamily specialists. Jeff Louks was named EVP investments, based in the Encino office. He joined M&M in 1987 and serves as a senior director of the firm’s National Multi Housing Group. Richard Ringer was named SVP investments in M&M's West LA office.