This Week's LA Deal Sheet
In a deal befitting the season when folks are opening gifts and sipping cocoa, Chanel S.A. just wrapped up a little something for itself—400 N Rodeo Dr in Beverly Hills. The French fragrance and haute couture house purchased the property from Rodeo-Brighton LP for more than $13k/SF, the highest sales price for a retail property in SoCal history.
One of the attorneys who negotiated the record-breaking deal, Elkins Kalt Weintraub Reuben Gartside's Scott Kalt, tells us how it came together. (The portrait behind him was painted, without his knowledge, by daughter Ally when she was in high school.) The building wasn't actively marketed; an unsolicited offer set things in motion. The buyer signed a contract to purchase the property for $160M, but Chanel's lease gave the company the right to match the offer. The building contains more than 11k SF and has been occupied by the retailer since 1993. Chanel exercised its right of first refusal and per its lease received a 5% credit against the matched price, resulting in a sale price of $152M. (Rodeo-Brighton bought the property in the late 1980s for $386k!) The seller is composed of two families: Scott and Jeff Reuben of Elkins Kalt along with attorney Ron Goldie repped the David family, while Dennis Ellman of Greenberg Glusker represented the Sater family. Gary York of Ballard Spahr repped Chanel. No brokers were involved.
Chanel, which also owns the property next door, plans to combine the two properties into a new flagship store. According to Scott, the families wanted to separate. It took sophisticated tax structuring, and a bit of legal engineering to work through the complicated partnership issues, to allow each family to achieve its goals. Will another record-breaking sale come along in the foreseeable future? It's a strong market, he notes, but there are only a handful of locations in the world that are so exceptional and unique that they can attract these numbers (think London, Paris, NYC and perhaps LA). "The high-end retailers want a presence in these critical locations, and they're willing to pay top dollar to get it." In case you're wondering, the previous record was set in 2013 when Bernard Arnault, CEO of LVMH Moet Hennessy Louis Vuitton S.A., purchased 319-323 N Rodeo Dr for $85M or just under $12k/SF.
SALES
MEIAO Investment bought a 102k-plus SF office building in downtown Long Beach (200 W Ocean Blvd) for more than $10M, with a plan to convert the property to apartments. CBRE’s Rick Warner and Dave Smith repped seller Milan Capital Management, which originally planned to redevelop the building into creative office. Tenants signed letters of intent for five of the nine floors. According to the brokers, the buyer provided certainty of closing at a favorable price, and Milan ultimately decided the proceeds could be redeployed into other office and retail investments for more favorable yields. Davco Realty Advisors' Dave Coe represented the buyer. Construction will begin in August with completion slated in June 2017.
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A JLL team led by Joe Leon and Javier Rivera closed the sale of Emerald Terrace, a two-building, 302-unit multifamily complex in LA (160 S Virgil Ave). M West Holdings bought the transit-oriented property, located between Silver Lake and Koreatown in walking distance to two Metro stations, from Fairfield Emerald Terrace LLC for $66.5M. Built in 1971, Emerald Terrace provides dual amenities, including a swimming pool, clubhouse and fitness facility in each building as well as a movie screening room.
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Marcus & Millichap's Rick Raymundo sold a 13-unit, townhome-style building in LA (1752 N Kingsley Dr) for $6.7M sale. The transaction completed the buyer's 1031 exchange, following the sale of property in NorCal. Marcus & Millichap Capital sourced the financing.
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A private investor in LA bought a Glendale apartment portfolio, comprising three non-rent-controlled properties totaling 43 units, for $13.5M or an average of $314k per door. The properties were built between 1985 and 1990, and include 1173 Justin Ave (above), 1151 Raymond Ave and 1115 Alameda Ave. The seller, a Burbank-based private trust, used the proceeds to complete a 1031 exchange into a retail property. Charles Dunn Co's Albert Shilton, who repped both sides, says five of the nine offers he received were from apartment owners in Glendale and the rest were from Westside investors seeking non-rent-controlled properties.
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Northpoint Realty bought two apartment properties in Long Beach (2705-2723 and 2727-2730 E Spaulding St) from separate sellers for a total of $4.3M or nearly $155k/unit. The properties are similar, courtyard-style apartment properties across the street from each other in the city's Eastside/Circle area. “We advised the sellers to list both assets at the same time with the strategy of attracting a 1031 exchange buyer, which is exactly what happened,” says Stepp Commercial's Robert Stepp, who repped the buyer and both sellers along with Michael Toveg. According to Michael, the sale price of $246/SF is one of the highest prices ever paid for comparable apartment assets in the surrounding area. Keeley Partners and BJJ Investments were the sellers.
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Grupe Properties Inc bought a 10k SF property in Long Beach (1347 E 3rd St) from Donna Runyon for $2.18M. Coldwell Banker Commercial BLAIR WESTMAC repped both sides: George Bustamante for the buyer and Cameron Jacques for the seller.
LEASES
Output, a music technology and software company, signed a 6,898 SF lease at a recently constructed industrial-turned-creative-office building (1424 S Spring St) in Downtown LA's Chinatown neighborhood. The company will be relocating from Hollywood to accommodate a growing staff and increased production needs. Jeff Gerlach at CBRE and Chris Tresp at Newmark Grubb Knight Frank represented Output. The landlord, City Constructors, was repped by Carle Pierose of Industry Partners.
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Recent leases at Downey Commons bring the 18k SF restaurant development (Lakewood and Gallatin in the City of Downey) to 100% pre-leased. Newly signed tenants include a 2,300 SF breakfast gourmet restaurant, a 1,600 SF Wood Fired Pizza concept, Coffee Bean & Tea Leaf, and Golden Corral. Colliers Retail Foresight's James Rodriguez and Michael Bohorquez repped the tenant and landlord.
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Vallarta Supermarket, the sub-lessor of Simi Valley Plaza, signed shop space subleases with a pharmacy and Cricket Wireless. James Rodriguez and Bradley Pagnone of Colliers Retail Foresight represented the tenant and landlord.
FINANCING
Square Mile Capital Management originated a $34.7M loan for a JV between affiliates of Ocean West Capital Partners and Singerman Real Estate. The financing is for the JV's acquisition of 100 West Broadway, a six-story, 209,882-square-foot office building in Long Beach, along with planned capital expenditures and tenant improvements, plus leasing commissions. The property consists of two office buildings connected by a two-story atrium, a large outdoor courtyard and a six-story parking structure. This marks Square Mile's first whole loan on the West Coast, according to managing director Charles Ochman.
CONSTRUCTION/DEVELOPMENT
Standard Portfolio Group and Wave Hospitality tapped San Francisco-based SB Architects to design a four-star winery resort they're developing on 135 acres in the Temecula Wine Country. The yet-to-be-named property will accommodate 200 to 250 guests and feature event spaces, a farm-to-table restaurant, a stand-alone brewery and a winery capable of producing 50,000 cases per year. More than 75% of the site will be preserved for agriculture. Calabasas-based ValleyCrest Design Group was selected to provide the landscape design for the project, the first winery resort developed under the new Riverside County Wine Country Community Plan.
KUDOS
LA-based American Realty Advisors once again participated in raising money and awareness for Movember, the global charity committed to creating a positive impact on men’s health. The firm's Mo Bro team (including at least one hirsute overachiever) has raised more than $17k since American began participating in Movember in 2013. Shown with their mustaches are: Joseph Yomtoubian, Young Kim, Jason Beach, Gary Steinhardt and Chris Smith.
EXECUTIVE NEWS
Coretrust Capital Partners, a private real estate operating company, added Esther Garrison as VP and controller. It'll be like a family reunion of sorts—the CPA and Certified Treasury Professional worked with Coretrust CFO Robert Morgan and principals Thomas Ricci, Randall Scott and John Sischo at Thomas Properties Group, where she served as VP of financial reporting.
