This Week's LA Deal Sheet
A JV of Western Avenue Capital and ALTO Real Estate Funds acquired American Fork Shopping Center, a 148k SF anchored retail center in a suburb of Salt Lake City, UT.
ALTO chief investment officer Peter Auerbach (left, with CEO Yaniv Melamud and chairman Mody Kidon) says the property delivered the optimal combination of in-place income, growth potential and a great location. This is the second investment in the Salt Lake City metro area for ALTO, a series of closed end equity funds that acquires income-producing real estate assets in the US. He says more deals are planned in the area. The acquisition price for the nine-acre American Fork center equates to a mid-8% going-in cap rate, providing mid-teens cash on cash returns as the JV partners seek to reposition the asset long-term.
Located on State Road, the main thoroughfare through American Fork, the center is 95% leased to national and regional tenants including Vasa Fitness, Jo-Ann Fabrics, Big Lots, Little Caesars and Del Taco. Likewise, Western Avenue Capital, an LA-based real estate investment, development and management company, hopes to grow its presence in the Salt Lake City metro. Partner Jonathan Kasirer says the property provides the ideal mix of cash flow and tenant mix, along with the opportunity to invest in a stable, growing market. (And, you can see the curvature of the Earth from it.)
SALES
Vision Wheel, a provider of custom wheels for cars, trucks and SUVs, acquired a newly completed 101k SF warehouse and distribution building in Corona (1470 E Sixth Ave) for $10.9M in a rare reverse exchange negotiated by Colliers International. In the same transaction, Colliers sold Vision’s former 55k SF facility in Rancho Cucamonga to AK Investment LLC for $6.2M. Brad Yates, Stefan Pastor and Richard Schwartz repped Vision.
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A private buyer purchased 10801 Venice Blvd in Culver City, a 8,568 SF medical office building, from another private investor for $6.5M. Avison Young's Lloyd Bakan and Gary Berwick marketed the property as an opportunity to add value through redevelopment of an "extremely well-located" site. The building, which received multiple offers, is one block west of Overland Avenue and directly across from the Culver Center Mall. The buyer plans to lease the property for the next few years with the potential of future redevelopment.
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Storm Properties bought a vacant lot on the northwest corner of Hadley Street and Magnolia Avenue in Whittier for cash, with plans to build 32 Craftsman-style townhomes surrounding a central park and recreation area. The new development, called Cambridge Place, required a zone change and general plan amendment from commercial to residential. A gas station, antique shop and miniature golf course once occupied the lot, which has been vacant since 2004. According to Storm development director Jon Spelke, the project will transform a parcel with graffiti and transient problems into a focal point and premier neighborhood. Delivery: mid-2016.
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Twin Dragon Marketing, a multinational textile manufacturer specializing in denim, sold its Gardena HQ (14600 S Broadway) in a sale-leaseback deal for just over $4.1M or nearly $112/SF. The 37k SF warehouse/distribution building was sold as a single-tenant, net-leased fee interest investment. NAI Capital's Jesus Henao and Paul Bellgraph repped Twin Dragon as well as the buyer, an LLC. The off-market deal involved a 1031 exchange and took close in two weeks.
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A six-unit apartment building in Santa Monica (2820 3rd St) changed hands in a $2.95M transaction with a closing cap rate of 3.2%. The property offered an opportunity to add value as some rents were well below market, according to Stepp Commercial's Kimberly Roberts Stepp, who repped the seller, an LA-based LLC. The private buyer is also based in LA. Built in 1962, the two-story property recently underwent a total renovation.
LEASES
Fragomen, Del Rey, Bernsen & Loewy LLP leased more than 13k SF of office space on the fifth floor at Citigroup Center, 444 S Flower St in Downtown LA, in an eight-year deal valued at around $2M. Savills Studley's Mike Catalano repped the tenant, while landlord Hines was represented in-house by Allen Polley. Fragomen, which specializes in immigration law, previously was located on the Westside for 35 years. Mitch Wexler, managing partner of the LA and Irvine offices, says the firm was attracted to DTLA's increasingly vibrant commercial core, access to transportation and talent, and the opportunity to be closer to the region's legal community hub. The new office will accommodate 70 people, including attorneys and staff.
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Regus Corp signed an 11-year lease at Arcadia Gateway Centre in Arcadia (440 E Huntington Dr, near plenty of hotels) for its latest SoCal workplace location. The company will occupy the entire third floor, containing more than 16k SF, bringing the project to full occupancy. Other tenants include Oracle Corp and Arroyo Insurance. NAI Capital's Carl Anderson repped landlord Arcadia Gateway Centre Delaware Partners LLC.
FINANCE
With the aid of its legal advisers at Sklar Kirsh LLP (including partner Andrew Kirsh (with family above), The Abbey Co received $310M in bridge financing from Prime Finance to recap a 34-property SoCal portfolio totaling 3M SF of commercial office, industrial and retail properties. Proceeds from the IO loan were used to refi two maturing CMBS loans and provide capital for the Garden Grove-based firm to maximize cash flow across the portfolio. As a result, The Abbey Co now has some $30M in capital reserves directed toward capital improvements, lease ups and tenant rollovers. CEO Don Abbey says this gives the firm, already masters of quick-market deals, "an ability to deliver at an entirely new level.” Sklar Kirsh real estate partner Mark Nicoletti served as the borrower's lead counsel for the complex loan negotiation; other members of the legal team included Ellia Thompson, Josh Loeb, Jennifer Mizrahi and Serineh Baghdasarian. Nebo Capital's David Blitz arranged the financing.
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Oak Grove Capital, a national multifamily mortgage lender, helped develop Freddie Mac's new bridge-to-resyndication loan, but it wasn't done there. The lender also closed the first such loan, providing nearly $14.5M for the acquisition of The Parks at Fig Garden, a 366-unit affordable housing complex in Fresno, simultaneous with an 18-month forward interest rate lock on a Freddie Mac tax-exempt loan. The new bridge product allows borrowers (like Fig Gardens buyer Community Housing Works) to acquire existing low-income housing tax credit properties at or near the end of their 15-year compliance periods, and to position those properties for recapitalization using LIHTC and long-term fixed-rate tax-exempt financing. Without it, many existing LIHTC assets have been purchased by conventional buyers for ultimate conversion to market rate multifamily properties.
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The Glendale-based Pango Group launched a new division dedicated solely to commercial escrow transactions. Pango is the umbrella brand for a group of closing service companies with some 20 offices and 200 employees in SoCal. The companies, which include Glen Oaks Escrow, American Trust Escrow and Escrow Trust Advisors, has processed over 200 commercial real estate transactions valued at more than $1B over the past five years.
CONSTRUCTION/DEVELOPMENT
Laurus Corp, an LA-based real estate investment and development company, completed a $15M property-wide renovation of the Hunt Valley Inn in Baltimore, MD. The top-to-bottom remodel of the hotel, which is now part of the upscale Wyndham Grand Collection, includes updates of function spaces, guest rooms and common amenities, and the reinstatement of the hotel's dining and service.
KUDOS
Recently, members of Newmark Grubb Knight Frank's Downtown LA Team volunteered at the Union Rescue Mission, serving 800 meals to resident and transient men, women and children. NGKF team members included Aliya Coher, Josef Farrar, David Kluth, Jennifer Fairfield, Ryan Harding, Lynn Kious, Greg Potikyan and William Robertson. Here they are with volunteer coordinator Daniel.
