This Week's LA Deal Sheet

Reflecting the recovering market, Universal Lofts, a 67-unit creative office condo turned rental community in Universal City, has begun marketing units for sale.

Recently, Dekel Capital placed a $31M bridge loan for developer AMI Real Estate to refi the project's existing debt. Approved under the City of LA's Live/Work ordinance, Universal Lofts was completed in 2008 as a for-sale project but instead was leased due to the market downturn. The new bridge loan provides AMI time to market and sell the remaining available units at prices ranging from $890k to $1.25M. This is the seventh financing Dekel has secured for AMI, identifying a lender that was able to understand the property's unique positioning. Shlomi Ronen, the real estate merchant bank's founder and principal, notes the shift in today’s market has allowed developers to re-evaluate their holdings and revise their business plans.

SALES

Berkadia's Dean Zander and Vince Norris closed a pair of San Fernando Valley apartment properties in separate transactions totaling over $32M and 128 units. The deals included the 71-unit Kester Gardens in Sherman Oaks (above), which the duo sold on behalf of the New Jersey-based developer that built the complex in 1988. The seller put on a condo map during the last cycle, and also added washer/dryers to all units. This marks the third San Fernando Valley property that Dean and Vince have sold for the same developer this quarter. The buyer, Kester Villas LLC, which paid $23M, plans to embark on a significant interior and common area reno. Separately, the Berkadia team sold The Park Sienna II, a 57-unit property in Reseda, for $9.2M cash. KW Commercial's Michael Koshet repped the buyer, which plans to operate the property in tandem with a neighboring property it owns.

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CIM Group completed the sale of 1800 N Highland, a seven-story, 87k office building in Hollywood across from the Hollywood & Highland Center. The company acquired the mid-century building in 2004 and undertook a complete reno and repositioning program, resulting in a Class-A office building at a time when the market had a limited supply of quality office properties. The work included replacing the façade with a modern glass and steel structure providing an abundance of natural light, and demolishing interior walls to create open floor plans. CIM also upgraded the common areas and built a new contemporary lobby featuring stone and wood finishes.

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MG Properties Group bought the 140-unit Ontario Town Square Townhomes in downtown Ontario from Artemis Real Estate Partner LLC for $38M. Built as condos in 2009, the luxury rental units average 1,500 SF in a variety of two-bedroom floor plans, and include two-car attached garages, nine-foot and vaulted ceilings, and full-sized washers and dryers. CBRE's Ray Eldridge and Paul Runkle repped the seller. The acquisition was financed with a mortgage provided by Chuck Christensen at Capital One. This marks MG's eighth acquisition in the past year.

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Ridge Crest Real Estate bought 20 acres of vacant land near Temecula's Pechanga Hotel & Casino and wine country with plans for a residential development. Matt Weaver, Al Apuzzo, Patrick Miller and Taylor Cook of Lee & Associates–North San Diego County represented the buyer as well as the seller, Waypoint. Located at the northwest corner of Pechanga Parkway and Loma Linda, the unentitled property is zoned professional office; however, the zoning allows for residential development subject to City of Temecula approvals.

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Storm Properties bought an unentitled parcel of land in Harbor City from International Church of the Foursquare Gospel for a residential development. Called McCoy255, the neighborhood of 21 two-story, single-family homes will feature contemporary architecture by KTGY Group. The three-bedroom residences are anticipated for delivery in mid-2016. The site was a quick all-cash purchase of excess church property and required a zone change. According to Storm Properties president Jay Ahluwalia, most homes in the area are more than 50 years old.

FINANCING

NGKF Capital Markets secured $27M of senior debt for 626 Wilshire Blvd, a 151k SF Class-A office building in Downtown LA. Jordan Roeschlaub, Daniel Fromm and Scott Selke led the NGKF team that structured the fixed-rate financing with Bank of America, serving as the exclusive adviser to Barker Pacific Group and Golden Boy Enterprises. The borrowers will use the proceeds to retire existing debt and for property upgrades. Originally built in 1966 as the State Mutual Savings & Loan HQ, 626 Wilshire features 10 floors of office and data center space, a spacious lobby and ground-floor retail space occupied by a fitness center. Barker Pacific Group purchased the building in 2003 when it was a near empty with a failed data center conversion, and in one year increased occupancy to 98%.

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Marcus & Millichap Capital Corp's Sharone Sabar arranged more than $149M in commercial real estate financing in the first half of this year, including $16.5M for a retail acquisition in LA; $11M for a medical office building refi; and $9.9M for an industrial asset in Altadena. Sharone says lender activity likely will not diminish, noting investors across all property types are refinancing assets to secure long-term fixed-rate debt in advance of potential rate increases. In addition, a number of SoCal apartment owners are selling their properties for less management-intensive single-tenant net-leased assets outside California, and foreign investment activity has increased in the last six months due to the ongoing issues in a number of countries, including Asian markets.

KUDOS

For the second year in a row, Kilroy Realty was named the North American leader in sustainability by GRESB, an industry-driven org that assesses the sustainability performance of real estate portfolios around the globe. GRESB ranked KRC first among 155 North American participants across all asset types, and fifth worldwide out of 707 total participants. KRC also for the second consecutive year won the Regional Sector Leader designation, ranking first among all North American office participants.