This Week's LA Deal Sheet
Downtown LA's burgeoning arts district continues to be a draw. Latest case in point: Partners Capital Finance, which provided a $3.4M, 100% LTC bridge loan for the acquisition of 245k SF of industrial space on four acres in DTLA.
Yesterday, we chatted with president and principal Bobby Khorshidi, who led the Partners team. He tells us the borrowers—related affiliates known as Arts City Center LLC and Loft Quinox LLC—plan to reposition two industrial buildings in the heart of the DTLA Arts District. He notes the group had an option to purchase the property at a price that was lower than market. The property went up in value during the period the borrowers had it under contract, so they had built quite a bit of imputed equity. This allowed Partners to structure a deal in which the borrowers were able to acquire the property essentially with 100% financing, and in a manner where Partners' loan investors felt secure on the transaction.
According to Bobby, the financing closed with a high single-digit IR and represented a lower risk transaction. Partners encumbered one of the two buildings, which was situated on multiple parcels, while a conventional CMBS lender encumbered the other building, which occupied one parcel.
Bobby says Partners' loan investors were pleased with the yield they were getting for relatively low risk, and the borrowers were happy they could close. Partners, a subsidiary of real estate investment management firm Partners Capital Inc, specializes in short-term commercial RE bridge loans. The firm's sweet spot is up to $10M, with many different buckets of collateral and a wide appetite. "We get as creative as we need to get in order to close a transaction." Its sister subsidiary, Partners Capital Acquisitions, is currently seeking value-add commercial real estate investment opportunities involving non-performing loans and fee simple real estate.
SALES
A 42-unit apartment building in Winnetka (20006 Roscoe Blvd) traded for just over $6M or $144k/unit. According to Berkadia's David Harrington, the buyer closed at the original offering price after a short contingency period. Built in 1963, the property is adjacent to Winnetka Avenue Elementary School.
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Waterton Associates LLC acquired its fifth property in SoCal this year: Sunset Plaza, a 183-unit apartment community in West Covina, expanding the firm’s SoCal portfolio to six communities comprising nearly 1,400 units. Waterton plans to implement a value-add renovation program to update individual units and amenity spaces, and refresh the exteriors. The community is a half-mile from the Plaza West Covina regional mall and walking distance to Queen of the Valley Hospital, one of West Covina’s largest employers.
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Carthay Pacific LLC bought a 6,789 SF retail property in LA (6001-6011 W Pico Blvd) for nearly $3.2M. Charles Dunn Co's Michel Hibbert repped the buyer, which has earmarked the property for a 42-unit multifamily development to begin construction within 12 months. Located near the Santa Monica Freeway, the site consists of three lots totaling more than 15k SF. Commercial Asset Group's David Aschkenasy repped the seller.
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A 1031 exchange investor bought 8911-17 Cynthia St in West Hollywood, a 12-unit apartment building on two parcels, for just over $4.3M or $361k/unit. The deal closed at $410k over the asking price at a 3.5% cap rate. The property had been offered for the first time in over 30 years, having been passed down within a long-term family ownership from generation to generation, according to KW Commercial's Rich Johns, who brokered the deal with Avison Young's Christopher Bonbright.
LEASES
The Honest Co, a lifestyle brand, signed an 83k SF lease to move its HQ to the top three floors of i|o at Playa Vista (12130 Millennium Dr), bringing the complex to 70% leased. The company will move from its current location at 2700 Pennsylvania Ave in Santa Monica early next year. Developed by Lincoln Property Co in 2010 and purchased vacant last year by Clarion Partners, the two-building, 300k SF i|o recently completed a renovation. According to Cresa's David Toomey, who repped the tenant along with Matthew Miller of Cresa and Marc Bretter of Travers Cresa, The Honest Co explored options in Santa Monica, Culver City and Playa Vista before focusing on i|o and its 12k SF outdoor deck. LA Realty Partners' Rick Buckley and Lincoln Property's Kent Handleman repped the landlord. LA Mayor Eric Garcetti's Business Team provided assistance.
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Guthy-Renker signed a 10-year, 90k SF lease at PCT (formerly Pacific Corporate Towers) in El Segundo, consolidating its longtime HQ in Palm Desert and marketing offices in Santa Monica. The deal takes occupancy at PCT (100 N Sepulveda Blvd) to above the 90% mark. With more than 400 employees, the direct marketing firm will occupy 3.5 floors in the upper half of PCT's 100 tower. CBRE's Grafton Tanquary III and John Ayoob repped the landlord. Savills Studley's Bruce Schuman and Cresa's Matthew Miller and Sean Westgate repped the tenant.
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A classic car restoration business leased 3k SF in North Hollywood (7119 Laurel Canyon Blvd). Todd Nathanson, Greg Offsay, Keith Corneliuson and Mike Matzner of illi Commercial Real Estate repped both sides.
KUDOS
KFA (Killefer Flammang Architects) is celebrating its 40th anniversary. Founded by partners Wade Killefer and Barbara Flammang, KFA has brought to fruition landmarks and places of importance in a variety of sectors: adaptive reuse, educational and public buildings, multifamily housing (including some 3,500 affordable units in SoCal) and hospitality, to name a few. The firm's adaptive reuse projects include the transformative Old Bank District—the first project under LA's adaptive reuse ordinance in 1999—as well as the Eastern Columbia building, Ace Hotel, Broadway Hollywood, Taft Building, Title Guarantee building, The Chapman, Rowan Building, Roosevelt Lofts, Pegasus, Pacific Electric lofts, 1010 Wilshire and Grand Lofts. “The 40-year mark is pivotal,” says Wade, an FAIA. “We can look back on scores of inspirational projects while our leadership unveils some of the most exciting work of our careers."
EXECUTIVE NEWS
ULI Los Angeles named community development banker Charmaine Atherton, an SVP with Bank of America Merrill Lynch, as its first woman chair. Charmaine, who succeeds Cox Castle partner David Waite, plans to focus on SoCal’s housing affordability crisis during her two-year term. She brings 34 years of experience in lending and investing in low- and moderate-income communities, including projects such as the YWCA Job Corps Urban Campus, the Chinatown Metro Senior Lofts, the MacArthur Park Family Apartments and the Downtown Women’s Center.
