This Week's LA Deal Sheet
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This may be the season for giving, but for Kennedy Wilson SVP Christine Deschaine, the spirit of giving never takes a holiday. Besides volunteering with local organizations throughout the year, she's applying her commercial brokerage expertise toward community development in Africa.
Since 2009, Christine has made annual trips to the village of Kihura in Uganda, as part of a team of professionals formed through a company out of Tennessee, African Leadership. "Everyone has an expertise on the team," she notes, including teachers, physicians and lawyers. Working with local community leaders, the team strives to end extreme poverty through the creation of local businesses. Here's where Christine's skills as a retail broker really shine (though normally she plies her profession in urban areas such as Burbank, Santa Monica and Culver City). In Kihura, her job is to see what businesses could thrive in certain markets and where to locate them, whether it's selling coffee and doughnuts or wedding gowns. "Being in commercial real estate, you understand what might work and what might not work based on the population."
On her most recent trip, lasting a tad over three weeks, the team members continued to work on self-sustaining businesses that they previously created, including a café, craft shop, hair salon and bridal salon. A particular priority was to expand the bridal salon to nearly double its size. "We procured a new space and brought in 60 wedding dresses." They also painted, put up racks for the dresses, and built cabinetry to hold shoes and other wedding accessories. Often, Christine will slip in a second African trip—this one into the Congo, where she teaches business and leadership in the local villages.
On her first visit to Africa, Christine felt grateful to live in a country that offers resources she took for granted, such as water, medical care, shelter and safety. When she's out of Africa, Christine continues to volunteer with local orgs such as the Ann Douglas Center for Women, Hope Gardens Family Center, Harvest Home, Child Share, and People Helping People Breathe Easy Ride-Santa Barbara. She gravitates toward organizations that assist women and families in crisis. Of course, she's also involved with CREW (Commercial Real Estate Women). When she started her career, there weren't nearly as many females in the biz as now, so the advancement of women resonates. "If we have skills that we can offer to other women, we feel obligated and gifted to be able to pay that forward."
American Realty Advisors bought Criterion on the Promenade, a high street retail/mixed-use complex in Santa Monica, from a JV between Metropolitan Pacific Capital and an opportunistic commingled fund managed by Clarion Partners. Located on the southeast corner of Arizona Avenue and Third Street Promenade (boasting 150 feet of frontage on both streets), the property contains 30k SF of retail, 23k SF of office and 32 studio and one-bedroom residential units. Major tenants include Victoria’s Secret, Brookstone and WeWork. Built in the 1920s as a movie theater, the building was renovated and extended for a multiplex in the '80s and renovated again in 2015. Christopher Hoffman and Rikki Keating of Eastdil Secured repped the seller.
Waterton plans to implement a capital improvement program at Vida Hollywood, its newly acquired 345-unit apartment community in Hollywood (1745 Wilcox Ave, half a block from the Walk of Fame). The program will update individual residences and select common areas at the two-building complex, which was built nearly 25 years ago. This marks Waterton’s ninth acquisition in 2015 and expands the firm’s California portfolio to eight communities totaling nearly 1,800 units. Vida Hollywood's amenities include a pair of resort-style swimming pools with sundecks, a 24-hour fitness center, an on-site dog park and a soundproof recording studio.
Rexford Industrial Realty acquired a pair of industrial properties for a total of about $21M. In Carson, the company bought a 172k SF cold storage industrial building for $16.7M and the assumption of a $9.9M first mortgage loan. The building (1065 E Walnut St) is 100% leased under new five-year lease extensions to two long-term tenants. Rexford also acquired 12247 Lakeland Rd in Santa Fe Springs for $4.3M. The single-tenant building is vacant, but the property includes 50k SF of excess paved land that's leased through March 2016. It's adjacent to another property the company owns at 10950 Norwalk Blvd, which provides a future option to consolidate and redevelop the two properties.
RealtyMogul.com, an online marketplace for real estate investing, completed its first full cycle equity transaction with the sale of American Mini, a self-storage property in Tucson, AZ. The 53k SF facility was purchased at the end of May 2014 for $1.7M and sold 18 months later for $2.5M. Investors earned an annual return of 16.8%. Separately, the company, which was launched in 2013, surpassed the $20M milestone in principal and interest returned to its investors. CEO Jilliene Helman says RealtyMogul.com is poised to unveil new products in 2016. "Since day one, we have been focused on creating an ecosystem in which investors are provided the tools and education to make investment choices that are best for them."
San Bernardino Marketplace, a 59k SF neighborhood shopping center in San Bernardino (263-275 E 9th St) changed hands for just over $12.3M. CBRE’s Arthur Flores repped the seller, a family partnership, as well as the 1031 exchange buyer. The center is anchored by specialty grocer El Super and is 96% occupied.
Rexford Industrial Realty bought 601-605 S Milliken Ave in Ontario, consisting of three buildings totaling more than 128k SF, for $13M or $101/SF. The company will implement a value-add modernization and capital improvement plan to increase below-market rents as leases roll. The property, which is 96% leased, is adjacent to Rexford's Ontario Airport Business Park and one block east of the company's Dupont Business Center.
JFE Shoji Trade America leased 6,500 SF at 301 E Ocean Blvd in Long Beach, in a 92-month deal valued at $1.7M. The Saywitz Co's Robert Ritschel repped the tenant, a $4B steel and manufacturing company based in South Korea. JLL's James Estrada repped landlord PCPI Shoreline Square.
Bank of the West signed a 10-year, 5k SF lease with The Swig Co at 595 E Colorado in downtown Pasadena, expanding its presence in the historic office building. The bank's wealth management division, which provides wealth planning, investment management personal banking and trust services, will occupy the ground-floor space in Q1. Travers Cresa repped the regional financial services company, a subsidiary of BNP Paribas. Swig was represented by Redstone Commercial.
Eagle Group Finance provided a $17M loan to refi a medical office building at 8900 Wilshire Blvd in Beverly Hills. The borrower, a private ownership group, also will use the two-year, non-recourse loan for tenant improvements and building upgrades. The 35k SF property was built in 1986 as an office building. The borrowers purchased the building in 2005 and spent $5.8M to convert it to an MOB. Eagle president Brian Good notes there's a limited amount of rentable medical space in Beverly Hills, and the demand from medical tenants is overwhelming. "We feel this is a conservative loan given the high-quality nature of the collateral and what we believe is a low loan-to-collateral value.” Eagle's director of loan originations, Lucas Allen, originated the financing.
IPA Capital Markets' Jake Roberts and Anita Paryani arranged $107M in financing for two multifamily properties in California, including Emerald Terrace Apartments, which received a $52M bridge loan. The loan-to-total cost value including all rehab dollars is 72%. The second origination was a $55M bridge loan for Fiori Estates, a newly constructed property in Rohnert Park. The loan-to-value is 65% and the loan-to-cost is 92%.
Kennedy-Wilson entered into an unsecured corporate revolving credit facility of $475M, replacing its previously existing $300M corporate unsecured line of credit. The nine-member banking syndicate includes three new lenders: Fifth Third Bank, BBVA Compass and City National Bank. The company notes it has been able to significantly expand its credit facility since entering the public market in 2009 with a $30M line of credit.
Douglas Emmett closed a $115M, non-recourse IO loan secured by a pool of four multifamily properties. Including a five-year extension option, the financing matures in December 2025. The floating rate is LIBOR plus 1.25% and has been fixed at 2.76% until December 2020 through an interest rate swap. The properties previously secured an $82M loan due March 1, 2016, and an $18M loan due June 1, 2017, both of which have been fully paid off.
George Smith Partners' Gary Mozer, Katie Rodd, Michael Anderson and Kyle Howerton placed $15.3M in non-recourse bridge debt on an Inland Empire retail center. The property is 83% leased, including a dark tenant that represents 5% of the space, and shadow-anchored by a regional grocer that is not part of the collateral. In addition, the center has a drugstore anchor whose lease expires in June. In a separate financing, GSP's Malcolm Davies, Kyle Henrickson and Bo Everett secured a $6M acquisition and reno loan for a 17k SF creative office building in Koreatown.
Trammell Crow and JV partner Principal Real Estate Investors launched construction on The Brickyard—two Class-A, cross-dock logistics buildings totaling 1M SF in Compton. A 525k SF building will feature 88 dock high doors, 270 parking spaces, and a 185- to 240-foot concrete yard. The second building, containing more than 481k SF, will boast 111 dock high doors, 307 parking spaces and a 185-foot concrete yard. Both buildings will include a 10k SF mezzanine, 36-foot clear heights, a fully fenced yard area, skylights, ESFR sprinklers, 20k SF of office space, and excess auto and trailer parking. CBRE's John Schumacher, Bret Quinlan, David Stromath and Dean Haney are marketing the project, which seeks LEED Gold. Completion: July 2016.
CIM Group completed 9Seventy, a 138-unit luxury apartment complex adjacent to the University of Colorado at Boulder. Developed in phases, the complex of five four-story buildings features an outdoor pool with resort-style seating, a fitness center, a multi-purpose community room, a clubhouse and a bike repair station.
Jason Lind was promoted to SVP of CBRE’s Assessment & Consulting Services division, responsible for directing its business development team across the US. The division provides appraisal, property condition, environmental, zoning and telecommunication consulting services in more than 300 major metro areas globally.