This Week's LA Deal Sheet
Hollywood has smashed another record—no, we don't mean The Hunger Games Part 2 unseating Spectre (at least until Krampus sells a few more tickets). That said, Champion Real Estate's sale of 1.75 acres in Hollywood for just under $40M has more in common with another Hollywood blockbuster: an offer you can't refuse.
We chatted this week with CEO Bob Champion (with wife Margie), who spent nearly four years entitling the site and planned to develop it. He believes the location (1600 N Highland and 1600 N McCadden) is one of the best in Hollywood. The site is approved for a 248-unit luxury apartment property that also will include 13k SF of ground-floor commercial space and 194 public parking spaces. "By the time we finally got it entitled," Bob says, "the offers that we were getting from the institutional developers were so high that it just didn't make sense for us to try to build it." The sale to an affiliate of Dallas-based Mill Creek Residential Trust broke a sales record for Hollywood at $160k-plus per door and nearly $524/SF. (Hey, when an institutional developer with a lower cost of funds than an independent developer like Bob pulls out his checkbook, what are you gonna do?) CBRE's Curtis Palmer repped both the buyer and seller.
At the same time, Champion Real Estate's value-add business of buying and rehabbing apartment buildings and shopping centers has really taken off, Bob says. (A case in point: Champion's recent purchase of the Ancelle Apartments in Koreatown, above, for $13.4M.) The company decided that the capital that was tied up in the Hollywood project would be better used to build that business. But don't think that Bob's done with new development in the current cycle. "My development DNA goes back a long time. We still have projects that we plan to build."
In fact, Bob's working on another project in Hollywood (above), directly across from the Capitol Records building.
SARES-REGIS Group acquired the 216-unit Vista Pointe apartment community in Covina (1400 Grand Ave), the first acquisition for its SARES-REGIS Group Multifamily Value-Add Fund II, from TIAA-CREF. The community, which features two-story garden-style buildings sprawled over 11 acres, was built in 1985 as a premium rental community with tennis courts, pools, spas, lush landscaping and two dog parks. Bill Montgomery, the fund’s CIO, says inconsistent efforts by previous owners to improve the property affected its operations and performance, providing opportunities to return Vista Pointe to best-in-class status through renovation and management. SARES-REGIS' repositioning plan includes in-unit and exterior improvements, makeovers of the leasing center, resident lounge and fitness center, and the creation of an internet café. One tennis court is being converted into a sports court and an adjacent resident lounge.
Parkman Holdings bought a three-building industrial complex in Vernon (3155-3201 Bandini Blvd) from Ralph Horowitz and Bandini Industrial Center, an Ezralow Co entity, for $22M. The site totals 243k SF of buildings on nearly 10 acres. CBRE repped both sides: Brandon Gill, Brandon Burns and Jae Yoo for the buyer, and Rick McGeagh, John Privett, Cameron Merrill and Jack Mergenthaler for the seller.
MBK Rental Living, a division of MBK Homes, bought the 12-acre Mitchell Crossing site in Murrieta from Melia Homes. The site (off Clinton Keith Road, west of I-215) is entitled for a 230-unit apartment complex, 66% of which will be townhomes. In addition, it's close to a Super Target-anchored retail center called The Orchard Stone Creek, the new Loma Linda University Medical Center Murrieta, and 37 acres recently purchased by Kaiser Permanente for a medical campus. CBRE's Paul Runkle and Rachel Parsons repped Melia, which owns the adjacent two parcels for future development of housing and neighborhood retail.
Homebuilder Landsea bought 550-plus entitled lots in Lake Forest from Sun Ranch Capital Partners, with plans to develop a gated community. The new community, which will have no Mello-Roos tax, will consist of 313 single-family detached homes and 240 townhomes in five distinct neighborhoods, plus a clubhouse and pool, picnic area and tot lots. According to CEO John Ho, Landsea is committed to the same principles of building with green technology that its parent company, one of China's largest homebuilders, has followed in Asia and Europe.
The Swig Co inked a lease with the nonprofit Social Vocational Services for 7,847 SF on the second floor of 595 E Colorado, a historic building on the Rose Parade route in downtown Pasadena. Lee & Associates repped the tenant, and Redstone Commercial represented Swig. The tenant provides services throughout California to individuals with intellectual or developmental disabilities. Built in 1928, 595 E Colorado contains more than 96k SF and is 98% leased.
Target leased 22k SF of retail space in Century West Partners' Next on Sixth, a 399-unit mixed-use apartment community under construction near the Wilshire/Vermont Metro subway station in Koreatown. Slated to open in November 2017 on the project's ground level, the new Target will be one of the retailer's smaller format stores aimed at urban dwellers. Completion of Next on Sixth is also scheduled for November 2017.
UCLA Health signed a 10-year lease for more than 18k SF at The Financial Center in Rolling Hills Estates (501 Deep Valley Dr). The tenant, which previously occupied 7,500 SF on the ground floor, will now occupy an additional two full floors. Sean O’Leary, Maury Gentile and Max Schneider with Newmark Grubb Knight Frank's El Segundo office repped UCLA Health. The landlord is West Coast Capital Partners.
Munger, Tolles & Olson LLP signed a long-term lease with CIM Group for more than 150k SF at 2 Cal, a 52-story Class-A office building on Bunker Hill in DTLA (350 S Grand Ave). The law firm will relocate its 375 LA employees into five full floors and a portion of a sixth floor in early 2017. CIM Group acquired 2 Cal in February 2014 and is currently renovating and expanding the building lobby. The project includes a newly positioned reception desk, optical turn-styles and maximized ceiling height, as well as new lighting fixtures, carrara marble flooring and new furniture.
Capital One Multifamily Finance provided an $11M Fannie Mae fixed-rate loan for a repeat client to refi Old Plantation, an all-age, 223-space mobile home park in Riverside. Damon Reed, SVP and director of MHC Finance, originated the deal.
Century West Partners says it will deliver 350 additional residences in two phases at K2LA, the developer's upscale apartment community in Koreatown. When complete, the complex on Berendo Street and New Hampshire Avenue (between Wilshire Boulevard and 7th Street) will consist of three buildings totaling 476 units, ranging from micro-studios to two-bedroom luxury apartments. Designed to meet the increasing demand for amenity-rich apartment living in metropolitan regions, the project boasts 24-hour concierge service, complimentary WiFi throughout the public spaces, and a bike kitchen offering a bike share program. The K2LA community also hosts a calendar of events and gatherings throughout the year, encouraging residents to meet and mingle. According to partner Randy Fifield, “K2LA is designed to change the face of rental living while contributing to the renaissance happening now in Koreatown.”
A 24 Hour Fitness club is the first anchor tenant to open its doors at The Promenade at Downey, a 600k SF shopping center underway in Downey. The new fitness facility (8810 Apollo Way) contains 42k SF on two levels and boasts a basketball court, a Kids' Club play area and towel service. The Promenade also will feature a 14-screen cinema complex, along with dining and shopping.
Mona Gisler was named chief financial officer at Douglas Emmett effective Jan. 1. Formerly chief accounting officer, she joined the firm in 2014 after 19 years with Deloitte & Touche, where she was a partner in the real estate group. She replaces Theodore Guth, who is retiring as CFO but will continue to work at Douglas Emmett as a senior adviser.
Akerman LLP elevated Herman Enayati to partner in the national Real Estate Practice Group in the firm's LA office. He handles a broad range of transactional real estate matters, including the negotiation of JV agreements and the acquisition, development and financing of commercial properties. His practice also includes representation of landlords and tenants in office and retail leasing, with an emphasis on leases involving banks and grocery stores.