The Real Deal – Robert Khodadadian

While Executive Directive 1, Los Angeles Mayor Karen Bass’ attempt to expedite affordable housing approvals, has generated interest from developers, there has been at least one major point of contention: parking. 

Or, rather, the lack of it when it comes to proposed ED1 projects: the vast majority of the ED1 plans don’t offer on-site parking. Land use research firm ATC Research found that 73 percent of ED1 projects, totaling about 9,100 proposed units, have no on-site parking.

Mayor Karen Bass introduced ED1 in December 2022 to exempting affordable housing developments from lengthy environmental reviews and cutting the approval process to under 60 days.

With these projects, developers don’t have to build parking, bringing costs down. 

“Developers are finding that in order, given the restrictions on rent, and construction costs today are really high, that the only way they can make a pencil is not to have parking,” said Chris Tourtellotte, who runs development for LaTerra Development.

But the question is: will developers be able to lease an apartment complex in Los Angeles without parking?

“What happens when you have no parking? It’s harder to rent the units,” said Moses Kagan, who runs Adaptive Realty and currently manages about 130 buildings in L.A., some of which have no parking. “As soon as your tenants start to earn more money, they move out, so you get more turnover. Over time, it’s harder to push your rents up, because you’re sort of constantly dealing with people turning over.”

L.A. is synonymous with parking — just watch any movie about L.A. and you’ll notice a lot of driving. 

For some, not building parking is the only way for the projects to pencil. And the issue of parking is emerging as a key factor in whether developers take advantage of ED1. 

For developers that are jumping on the ED1 bandwagon right now while the program is still in its early stages, getting rid of parking is no brainer given high construction costs.

“The reason why a lot of these projects have no parking is because of the nature of private developers that are doing these projects, because they’re taking the biggest risk,” says According to Ben Lee, an agent at Marcus & Millichap, who has sold a number of sites entitled under ED1.

Lee notes that these smaller developers, who he calls “cowboy” investors, that are using ED1 are taking on more risk because costs are high and the program is new, — no projects have been built, yet. More risk-averse builders and institutional investors are still evaluating how these ED1 projects pan out. 

At the end of the day, it’s about finding the cheapest land, and the cheapest way to build. 

“The reason why these developers are doing it in South LA without parkings because the dirt is the cheapest there,” he said.

“Developers are finding that in order, given the restrictions on rent, and construction costs today are really high, that the only way they can make a pencil is not to have parking,” says Chris Tourtellotte, who runs development for LaTerra Development.

For most, parking is just a part of the overall calculations and assumptions the builders are making.

Some developers are using the ED1 program as a way to expedite projects that previously looked to score incentives under the city’s Transit Oriented Communities, or TOC, program.

The city introduced Transit Oriented Communities (TOC) Affordable Housing Incentive Program in 2017 as a way to incentivize affordable housing, with the incentives correlated with proximity to public transport. The program offers density bonuses, height increases and fewer parking requirements for residential projects that have a certain number of affordable units.

“A developer who has bought a piece of land and has a sunk costs into the TOC entitlement strategy that doesn’t pencil anymore is using ED1,” Lee said. 

Developers are not necessarily flocking to ED1 because it removes parking requirements, but is an alternative route to getting a project approved. 

Some developers don’t see parking as an issue long-term. 

“There’s such a lack of affordable housing in the city of L.A., that people would still be glad to find an affordable unit with rent restrictions, and then either get rid of their car and take the bus or Uber or taxi or ride their bicycle, or park their car on the street,” Tourtellotte said.

“With fully autonomous self-driving vehicles and robo taxis, less and less people will own cars, because cars won’t really be in park.”

The post Parking emerges as contention point for ED1 projects appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Affordable Housing, ED1, LA Development Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Hudson Pacific Properties is feeling the burn of withering office markets. 

The Los Angeles-based real estate investment trust lost $52 million in the first quarter, up 160 percent from its $20.4 million loss reported in the same period last year, according to an earnings release on Wednesday. 

The reason: Hudson Pacific harvests less and less revenue from its office properties. 

Vacancy “remains stubbornly high as many existing tenants continue to downsize,” CEO Victor Coleman said on a call Thursday discussing the firm’s quarterly earnings. 

The company reeled in $175 million in revenues from its office portfolio from January through March, down roughly 15 percent from the first quarter of 2023, financial filings show. 

Its office portfolio was 78 percent occupied on average in the first three months of this year, down from 85 percent a year prior. 

Hudson Pacific is looking to sell three office buildings totaling around 900,000 square feet, or roughly 8 percent of its office portfolio, Coleman said on the call. The firm did not identify which buildings it was looking to shed. 

The San Francisco Bay Area is causing the most pain for the company in terms of vacancy — its portfolio there was 74 percent leased on average in the first quarter. 

The leasing is uneven, too. One building, Skyport Plaza in North San Jose, was 6 percent occupied, while others including 3400 Hillview Avenue, were 100 percent leased.

On some buildings, Hudson Pacific is still bullish. At 1455 Market Street, where the firm just signed the City of San Francisco to a 157,000-square-foot lease, the firm paid $43.5 million for a 45 percent interest in the building, the firm said on Wednesday. 

Over the past few years, Hudson Pacific has relied on its movie studio portfolio to boost revenues, given the uncertainty around the office sector. 

But, with two sweeping strikes that hit the entertainment industry, Hudson Pacific is in recovery mode on those assets, too. 

Revenues from its studio portfolio — about 10 percent of all its holdings — have shrunk 15 percent over the last year, financial filings show. In November, the firm was expecting a “tremendous upswing” when filming resumed, but hasn’t seen it yet. 

“The film and television industry has recovered far more slowly than anticipated,” Coleman said, though he remained hopeful. “There is no question that high-quality, original content will remain essential for the studios growing their subscriber bases and building valuable IP.”

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Earnings, LA Office Market, SF Office Market, Studio Real Estate Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Shangri-La Industries, the troubled developer of motel-to-housing conversions for homeless residents, has declared Chapter 11 bankruptcy on four projects in California.

The Los Angeles-based firm, accused of fraud by the state in connection to its state-funded conversions, filed for bankruptcy protection on former motel projects in Redlands, Thousand Oaks, Salinas and San Ysidro, the Los Angeles Daily News reported.

The court filing affects the former Good Nite Inn in Redlands, the former Quality Inn & Suites in Thousand Oaks and the former Sanborn Inn in Salinas, each funded by the state’s Project Homekey program.

It also affects a former Travelodge in San Ysidro, which was funded under the state Community Care Expansion program, according to Brian Sun, the attorney representing Shangri-La. 

City officials couldn’t say how it might impact their respective Homekey projects.

Gov. Gavin Newsom launched Project Homekey in June 2020 to provide shelter for homeless residents during the pandemic. The state has allocated more than $3 billion to cities and counties to buy motels, hotels and vacant apartment buildings for permanent homeless housing.

Since 2020, the state Department of Housing and Community Development has provided Shangri-La Industries more than $121 million in Homekey funds to convert motels up and down the state into permanent supportive housing for the homeless.

Then the developer defaulted on loans tied to seven properties, and owed about $41 million in delinquent debt as of Dec. 1, The Real Deal reported. In separate court cases, lenders had sued Shangri-La and asked the court for receiverships, an alternative to bankruptcy. 

In January, Shangri-La Industries lost control of six out of seven former motels for Project Homekey sites to court-appointed receivers in Salinas, King City, San Bernardino and Redlands.

After TRD reported on the defaults, the state opened an investigation into Shangri-La and found the firm had violated its operating agreements tied to six of the properties. In January, state Attorney General Rob Bonta filed a lawsuit against the firm, claiming the developer breached state contracts and alleging fraud. 

A Southern California News Group investigation last year also found that lenders and contractors doing business with Shangri-Li said they weren’t paid for completed work at the former Good Nite Inn in Redlands, now Step Up in Redlands, and the former All Star Lodge in San Bernardino, now Step Up in San Bernardino.

Dozens of mechanic’s liens totaling millions of dollars have been filed over the past year at recorders’ offices in San Bernardino, Ventura and Monterey counties, the sites of Shangri-La projects for Homekey. The firm’s failure to pay resulted in more than a dozen lawsuits.

Last month, the Redlands City Council terminated its Homekey agreement with Shangri-La as the state housing regulators accused the developer of misappropriating $114 million in Homekey funds.

Sun, the attorney for the developer, said the bankruptcy filings are part of the developer’s plan to restructure and finish its commitments on the various Homekey projects.

In a lawsuit in March, Shangri-La Industries accused its former chief financial officer, Cody Holmes, of embezzling millions of dollars in company money so he and his former girlfriend could live high on the hog, placing the developer’s state-funded projects in jeopardy, including those listed in its Chapter 11 filing.

Andy Meyers, CEO of the embattled company he co-founded with the late Hollywood producer Steve Bing, has blamed the state for the firm’s delinquencies, saying that lenders triggered defaults because government officials failed to sign regulatory agreements for the various conversion deals.

— Dana Bartholomew

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Fraud, mechanics liens, Project Homekey Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

WeWork has agreed to keep two more locations in Southern California — one in Long Beach and another at South Coast Plaza in Costa Mesa. 

The coworking firm, which is currently making its way through bankruptcy, has filed motions to keep its leases at 100 West Broadway, a building owned by Redwood Urban, and CJ Segerstrom’s Park Tower at South Coast Plaza, according to court records. 

WeWork leased two floors totaling 33,000 square feet at 100 West Broadway in 2016, according to reports at the time. When Redwood Urban bought the building for $60.5 million in 2018, one of the hooks was that WeWork held a long-term lease there. 

WeWork will pay $307,400 to keep its Long Beach lease, a maneuver known as a lease cure, court records show. Redwood Urban agreed to reduce its rent, extend WeWork’s term and require a reduced guaranty — cash that will go towards paying the landlord if WeWork defaults on the lease.

At Park Tower, a 335,500-square-foot building at 695 Town Center Drive in Costa Mesa, WeWork leased about 38,000 square feet and opened its location in 2019, according to a marketing brochure for the space. 

At that location, WeWork has agreed to pay $383,000 to keep the lease and share some profits with landlord CJ Segerstrom, court records show. CJ Segerstrom, in return, agreed to reduce rent and WeWork’s guaranty on the lease. 

WeWork has been working to determine which leases across the country it wants to keep, and which it wants to shed. 

The firm recently rejected leases in Houston, Texas, and San Jose, according to bankruptcy records. 

Last month, WeWork said it came to an agreement to exit bankruptcy, thanks to $337 million in funding from Yardi Systems and $112 million from existing bondholders. The deal will allow WeWork to skirt being sold to its co-founder and former CEO Adam Neumann, who had emerged as a potential buyer. 

The post WeWork negotiates to keep Long Beach, South Coast Plaza locations appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Bankruptcy, LA Office Market, Leasing Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Los Angeles could soon protect rent-controlled apartments in a part of the city that could be bulldozed for streamlined affordable housing projects, displacing tenants who can’t afford to move.

City Councilwoman Eunisses Hernandez has filed a motion to impose a discretionary review of projects containing rent-controlled units within her First District, which stretches from Eagle Rock to Chinatown, City News Service reported.

The motion comes in response to a proposal by an affiliate of Lou Jacobs, an executive with California Landmark Group, to bulldoze a 17-unit apartment complex at 4719 North Toland Way in Eagle Rock, as reported by Urbanize Los Angeles.

The demolished apartments would make way for 153 affordable apartments in a development fast-tracked by Mayor Karen Bass’ Executive Directive 1, which expedites affordable housing projects and allows developers to avoid discretionary review. 

The proposed building would be income-restricted, with units priced below market rate.

But critics said the redevelopment would lead to the loss of 17 rent-controlled apartments and displace 45 tenants, including families, seniors, disabled and sick residents who have lived there for years.

“Most were unaware of the redevelopment plans until it was published by niche media outlets (Urbanize LA) focused on development, leaving them with limited time and options to understand their rights and prepare for relocation,” Hernandez’s motion reads.

“This in part was attributed to the swift approval process without discretionary review and the absence of public hearings and related notices.”

The council voted 12-0 to instruct the Planning Department to immediately prepare an Interim Control Ordinance. Once drafted, it will go before the Planning and Land Use Management Committee before a final vote by the City Council.

The temporary regulation would include a discretionary review process for the “demolition, building, use of land, grading and any other applicable permits” of properties with five or more rent-controlled units, or units that have been vacated as a result of the Ellis Act within five years.

Hernandez told the council before the vote that she wished they had more tools to support tenants living in rent-controlled units. While the city has a policy in place to ensure relocation assistance, she said it was not enough. 

Los Angeles gives tenants “first access” to new units if they previously lived in a building that was redeveloped, but Hernandez said tenants often don’t rent the redeveloped units because they can’t afford them. 

She said her motion is “not anti-development” — in fact, she said she wants to see a lot more development, according to City News.

“We want to streamline affordable housing, all of it, but the missing middle cannot come at the expense of our most affordable units,” Hernandez said. “This is about ensuring that we protect our RSO (rent stabilization ordinance) housing stock.”

The Los Angeles Housing Department reports more than 650,000 rent-controlled units citywide, including 51,631 in the First District. 

Councilwoman Monica Rodriguez, who represents the northeast San Fernando Valley, backed Hernandez’s motion.

She called it “disheartening” to see such an immense shift in areas like Highland Park and Eagle Rock, when redevelopment displaces long-time residents who are often low-income minorities.

“We shouldn’t be doing an exchange and displacing people. This is not the way it’s supposed to work,” Rodriguez said. “We have to be smarter policy makers, and not just fall to whatever whim that people have in directives that are trying to accelerate the construction of housing — not at the expense of the very affordable housing that is keeping people housed.”

— Dana Bartholomew

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Legislation Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Millennium Partners has killed a $1 billion plan to build highrises around the Capitol Records Building in Hollywood, a decade after active earthquake faults were found under the site.

The New York-based investor withdrew its requests for approvals for the four-building Hollywood Center project on parking lots next to Capitol Records and the Pantages Theatre along Vineland Avenue, north of Hollywood Boulevard, Urbanize Los Angeles reported.

The L.A. Planning Department has terminated each entitlement request, ending the development.

Plans for the 4.5-acre Hollywood Center, proposed in 2012, called for two office and residential towers of 35 and 45 stories, which would have become the tallest in Tinseltown. They would be flanked by two 11-story buildings, with underground parking.

The project was to contain 1,005 homes, including 133 set aside as affordable housing for “extremely-low-income” and “very-low-income” seniors in the two smaller buildings.

Millennium bought the parcels of parking lots in 2006 from Capitol Records for an undisclosed price.

But the 1.3-million-square-foot development, once known as the Millennium Project, hit a couple of serious snags.

The first resulted from active earthquake faults found beneath the development site by California Geological Survey, which raised questions about the safety of the project. Consultants hired by the developer said the faults didn’t run below the site.

The second came after a judge halted the project because an environmental impact report failed to note the state seismic research that “strongly suggest” an active strand of the fault crosses the project site.

Philip Aarons, founding partner of Millennium Partners, didn’t reveal the firm’s plans for the failed project site’s future.

“Sixteen years ago, we spearheaded the effort to save the world-renowned Capitol Records Building by getting this iconic structure declared a City of Los Angeles historic-cultural monument so that future generations could continue to appreciate its timeless beauty,” Aarons said in a statement. 

“Over the last several years we have worked to preserve this architectural treasure by completing a full seismic upgrade of the structure so that the building can return to its critical role within the music industry,” he said. “While we have made the decision for now not to move ahead with our vision to build housing on the surrounding surface parking lots, we remain committed to working to make the Hollywood community a better place to live and work.”

The developer had also faced criticism over its 58-story “leaning” and sinking tower in San Francisco. Last summer, the condominium highrise stood 1 inch straighter after a $100 million fix.

While Millennium Partners may have stepped away from the star-crossed site near Hollywood and Vine, it hasn’t left the neighborhood, according to Urbanize. In late 2022, the developer won approval to build a 15-story office tower at 6450 Sunset Boulevard.

— Dana Bartholomew

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The post Millennium Partners scuttles $1B plan for highrises in Hollywood appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Earthquake fault Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Mohamed Hadid, the Los Angeles-based developer and reality TV personality, filed for bankruptcy last week on 2451 Summitridge Drive, his four-acre vacant lot in Beverly Hills — after incurring millions in IOUs. 

Tree Lane LLC, the Hadid-controlled entity that owns the land, filed for Chapter 11 reorganization on April 25, according to a California bankruptcy court filing. 

The LLC owes $54.6 million to creditors, according to the filing, including about $260,000 to various contractors. The entity’s interest in the property is worth about $35 million, the filing said. 

Among notable creditors, there is Hadid himself – owing a loan in the amount of $1 million. And there is another creditor, Nabeel Zahid of Geneva, Switzerland, who provided a $3.4 million unsecured loan.

Tree Lane has no funds in its associated business checking account at Bank of the West, according to the filing.

Other creditors have already filed liens on the property. In September 2023, Bella Vista Estates’ Owners Association, a homeowners’ association, claimed a lien on the property, citing $48,893 in unpaid charges. By November, the HOA served Hadid’s entity with a notice of default, claiming $66,200 in unpaid charges. 

The property, which is not insured, requires immediate attention due to “emergency erosion control” that “risks damage to other property,” according to the initial bankruptcy petition.

Neither Hadid nor his attorneys responded to requests for comment. 

Hadid bought the property in 2015, but his plans for the land weren’t clear.

Skylark Capital Management sued Hadid in 2022 over the property, claiming he failed to finish the project, failed to pay property taxes and failed to make loan payments. He secured a $31.3 million loan from Skylark back in 2018, according to the 2022 suit.

“Unfortunately for creditors like Skylark, Hadid, in recent years, has been an abysmal failure in real estate development,” the suit alleged, citing other failed developments like Strada Vecchia and 9650 Cedarbrook.

The same lawsuit cited other pending litigation alleging Hadid has failed to pay workers on his development projects at 2451 Summitridge and 9650 Cedarbrook. 

The celebrity spec developer, who is no stranger to legal fights and bankruptcies came to Los Angeles in 1991 from Washington D.C., leaving behind a “foreclosed home, a shuttered hotel, a substantial office development business and a failed marriage,” TRD reported earlier. He’s known for building over-the-top mansions, though his plans for hundred-million-dollar homes haven’t always panned out.

In 2022, Hadid filed for bankruptcy on the 37-acre 9650 Cedarbrook project, which he once listed for $250 million. The site still remains the largest-ever permitted residential construction in Los Angeles.

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Bankruptcy, Beverly Hills, Default, Lawsuits Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Grandview Partners is se lling a portfolio of four “suite-living” apartment projects in Mar Vista, Westchester and East Hollywood, according to an offering memorandum compiled by their brokers at Kidder Mathews.

The not-yet-constructed projects include 107 suites, 538 beds and 176 parking spaces, according to the marketing materials, which did not disclose an asking price. Kidder Mathews describes the projects as “newly constructed suite-living apartment buildings that are also focused on housing members of communities that share a common vision and mission.”

The memorandum cites Los Angeles Room & Board, a nonprofit that provides transitional housing for community college students and recently bought two L.A. suite-based properties, as an example of how the portfolio’s co-living design could function.

Sites for the developments are located at 4339 Berryman Avenue and 4367 Berryman Avenue in Mar Vista, 8833 Reading Avenue in Westchester and 626 Wilton Place in East Hollywood. Three of the projects are due to be completed in the fourth quarter of this year, with the East Hollywood property slated for the first quarter of 2025.

Units range from one bedroom up to six bedrooms, in keeping with the suite concept. 

The first site, located at 4339 Berryman, was bought for $6 million in September 2021, according to property records. In 2022, Connecticut-based Grandview Partners secured a loan for $21.9 million from East West Bank for the development.

The second property at 4367 Berryman Avenue was purchased for $5.38 million in September 2021. The same owner, Grandview Partners, scored a $17.8 million loan in 2022 from East West Bank for the site, maturing in 2025.

No information was listed on PropertyShark for the 8833 Reading Avenue site, but a LoopNet entry called it a third-acre multifamily property.

The final site, listed at 632 Wilton Place, was bought by a Connecticut buyer in 2022 for $6.6 million. The LLC associated with this property shares an address with Grandview Partners in Greenwich.

Christopher Giordano, George Crawford and Phil Taggart at Kidder Mathews hold the listing and did not respond to a request for comment. Owner Grandview Partners also did not respond to a request for comment.

The post Grandview Partners to sell LA portfolio of “suite-living” projects appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Multifamily Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Mall owner Macerich is on the ropes, and may have to sell or surrender properties to tackle its debt.

The Santa Monica-based real estate investment trust, owner of 47 million square feet strip and indoor malls across the U.S., posted a net loss of $126.7 million in the first quarter, more than double its loss of $58.7 million during the same period last year, Bisnow reported, citing a quarterly earnings report.

During the quarter, Macerich’s funds from operations fell to $74.6 million, from $95.9 million a year ago.

The REIT partly blamed the decline on the bankruptcy of Express, an apparel retailer that plans to close more than 100 of its 530 stores.

The 60-year-old Macerich withdrew its prior earnings guidance, citing a plan under new leadership to reduce its debt.

Former CEO Thomas O’Hern retired March 1, with former Spirit Realty Capital CEO Jackson Hsieh taking the helm.

“We have already started to execute on that plan, including property sales, potentially returning assets to lenders and buying out joint venture interests on certain assets,” Macerich said in a statement.

Early this month, Macerich defaulted on a $300 million loan tied to the 527,000-square-foot Santa Monica Place outdoor mall at 395 Santa Monica Place.

The firm has also reworked multiple loans this year, including a $155 refinance of its Danbury Fair Mall in Connecticut, while closing a three-year extension of the $85 million loan on the Fashion Outlets of Niagara Falls in New York, according to Bisnow.

Macerich is also closing an extension on a $151 million on The Oaks, in Thousand Oaks, and is refinancing a $256 million loan on Chandler Fashion Center in Arizona, which matures in July.

The company beat expectations for revenue, reporting $208.8 million, up from an expected $203.5 million, but down from $214.9 million in the first quarter last year. Expenses rose to $232.1 million, up from $192.9 million in the prior quarter and $216.9 million the year before.

Macerich has signed more than 1 million square feet of leases so far this year, a 14 percent increase from the same time last year. And last year was a record year for leasing at the company, with 4.2 million square feet of deals signed.

Occupancy across Macerich shopping centers was 93.4 percent, up from 92.2 percent a year ago. Rents for re-leased space was up 14 percent.

— Dana Bartholomew

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The post Macerich posts $127M quarterly loss, looks to sell or exit properties appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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The Real Deal – Robert Khodadadian

MicroVention Terumo has bought an office building in Aliso Viejo for $44 million, or 45 percent less than its asking price.

The locally based medical device maker picked up the nine-story, 242,700-square-foot building at 45 Enterprise, in south OC, the Orange County Business Journal reported. 

The seller was Pacific Life Insurance, based in Newport Beach, which vacated the property during the pandemic during a shift to remote work. The price works out to $181 per square foot.

Pacific Life bought the building in 2007 for $15 million, or $62 per square foot.  It initially listed it for $63.8 million, or $263 per square foot.

Orange County offices, before office demand fell during the pandemic, typically traded for around $300 per square foot, unidentified real estate sources told the Business Journal.

The property, part of the 16-building Summit Office Campus, was built in 2008 next to the current headquarters for MicroVention Terumo at 35 Enterprise, off the 73 Freeway.

MicroVention Terumo, a unit of Terumo, based in Japan, makes catheters that treat strokes. Of its 1,250 workers, 20 percent were hired over the past year.

The firm expects to begin occupying its new building this fall, after cosmetic upgrades to the property.

The building’s whale statue, an homage to the Pacific Life logo, will remain, as state law prohibits the removal of such art pieces. 

“It’s beautiful and it isn’t going anywhere,” MicroVention CEO Carsten Schroeder told the Business Journal. 

— Dana Bartholomew

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The post MicroVention Terumo pays $44M for office building in Aliso Viejo appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

Uncategorized, Headquarters Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

When Megan Watson, who runs development in Los Angeles for Grubb Properties, started planning an apartment project in Santa Monica, she prepared for a challenging road ahead. The city had a history of giving developers a hard time.

Grubb first applied for a 60-unit building at 700 Santa Monica Boulevard in August 2022 and resubmitted its application for 99 units in July, after the city of Santa Monica signaled that it was making changes — it wanted to start taking developers’ concerns and zoning issues seriously and get more housing built. 

In eight months, Grubb got the green light to build an eight-story building with 89 market-rate apartments and 10 affordable units.

“This was probably our fastest entitlement that we experienced in the state,” Watson said. Eight months would have been a speedy timeframe for any California city, she added. Approvals sometimes take up to two years if there are appeals involved.

But it wasn’t just the city’s speed that impressed Watson — it was how Santa Monica was now talking about building housing. She sat in on a number of City Council meetings, where planners and council members “recognized that the best way” to meet state housing goals was to allow for density. 

What Watson experienced turned out to be a wholesale shift in how Santa Monica approaches new development. In February, a month before Grubb scored its approval, Gov. Gavin Newsom designated Santa Monica a “pro-housing community,” citing the city’s efforts and progress made through an affordable housing program. 

Grubb’s approval appeared to indicate that the designation meant something real, an important change at a time when politicians and developers around the country are aching for opportunities to build and wondering how to change local hearts and minds around new projects.

This may be a surprise to anyone who has been trying to build in the city of Santa Monica over the last few decades, as shown by baffled reactions to the pro-housing designation on social media.

In 2016, for instance, voters were presented with a ballot measure that would have required citywide votes to construct buildings taller than two stories. A sizable minority — 44 percent — of voters were in support, though the measure failed to pass.

“Santa Monica has been well-known as a place that is not friendly to housing development or really any kind of new development,” said Adam Deermount, a West Coast-based portfolio manager at lender Nikols Mortgage Fund. “It tends to be very NIMBY-dominated.”

“If you were to ask a group of 100 developers familiar with development in Southern California to name three development-friendly cities in Southern California, I don’t think any of them would mention Santa Monica,” he added.

The shift to encouraging housing development did not come out of nowhere. 

“If you were to ask a group of 100 developers familiar with development in Southern California to name three development-friendly cities in Southern California, I don’t think any of them would mention Santa Monica.”
Adam Deermount, Nikols Mortgage Fund

The city had to learn the hard way: After failing to get a state-approved housing plan together by October 2022, it faced a deluge of builder’s remedy projects, which threatened to add more than 4,000 units to the city’s housing stock. Builder’s remedy serves essentially as a penalty for cities that do not get state-mandated housing plans in order by a certain deadline. 

“It scared a lot of people into realizing that this wasn’t a game with no consequences,” Santa Monica City Council member Jesse Zwick said of the builder’s remedy projects. ”If the city continued to sort of thumb its nose at the state, there would be a real loss of local control over our zoning code.” 

Santa Monica has been making gradual progress, city data shows, though actual development has been uneven. Out of around 9,300 housing units proposed since 2010, about 3,000 have been approved.

The number of units built in Santa Monica shrank last year, though the proportion of affordable housing increased. 

In 2023, 331 units were completed, including 148 affordable units, compared to 539 total units a year before with 92 affordable units, according to city housing data.

And developers want to make their mark on the oceanfront city — for example, Tishman Speyer, the New York-based development giant, filed plans to build 620 units across three acres in Downtown Santa Monica in early 2022. Tweaking city code may make it easier for these players to do so. 

Moment of reckoning 

In 2021, the state tasked Santa Monica, like every other California city, with planning for new homes. For Santa Monica, that meant adding roughly 1,000 units a year by 2029 — which Zwick called “ambitious.”

With Santa Monica’s “reputation of being hostile to business interests in general, and perhaps those seeking to create more homes in particular,” this would be tough, Zwick said. 

There were also real penalties for cities that didn’t make adequate plans, Zwick added.

Santa Monica failed to get its housing plan approved by the state by October 2022, leaving it open to builder’s remedy projects. By May 2023, 16 had been filed. 

The city reacted fast. By streamlining certain housing approvals and incentivizing building housing on parking lots in residential zones, it got its housing plan approved by the state, closing the window for builder’s remedy projects. The City Council approved a more comprehensive rezoning that allowed taller mixed-use buildings along its commercial corridors. The approval process was no longer discretionary, but by right as long as the zoning allowed for it. 

“There’s no discretionary process whereby people like me can either say yes or no, based on their own personal lives — and that provides a lot of certainty to [developers] hoping to operate and invest in Santa Monica,” Zwick said. “As a council member, I don’t want to be voting yes or no on individual projects.” 

It wasn’t just the builder’s remedy and state pressure fueling the City Council’s appetite for reform. A slump in tourism and the growth of e-commerce and working from home have all had a negative impact on Santa Monica’s budget, according to Zwick.

For the city, it’s become more important to win over businesses and investors and “make it easier on people seeking to put their money in Santa Monica,” he added. 

Rewarding intent

Housing advocates describe the pro-housing designation Santa Monica received as part of a high-level, forward-looking reward system for the cities complying with the state’s housing law. 

The program, which first appeared in California’s 2019 budget, allowed  the state’s Department of Housing and Community Development to label cities as “pro-housing” starting in July 2021, according to a report from the Terner Center for Housing Innovation at the University of California, Berkeley.

Alex Ramiller, who co-wrote the report, described the program as “a proverbial carrot — the state’s way of encouraging local jurisdictions to go out on their own and to do things that are good in terms of promoting housing production.”

“It scared a lot of people into realizing that this wasn’t a game with no consequences.”

Santa Monica City Councilman Jesse Zwick on builder’s remedy

But because the program is so new, Ramiller and other Berkeley researchers found it difficult to quantify the impact of the pro-housing designation. Did the label actually mean the city had added more housing? 

“The pro-housing designation program is more about intention and future housing production rather than about past or present production,” Ramiller said. “So it’s not intended to necessarily be a backwards-looking measure.”

While the designation does open doors to funding, for Santa Monica, the stamp of approval seems to be more about reputation. The city has only applied for $1 million in emergency rental assistance through the prohousing program, but is “continuing to monitor other available potential funding opportunities,” according to the city spokesperson.

“I’m encouraged by it,” said Sonja Trauss, who founded nonprofit Yes In My Backyard, which advocates for housing development. “Like any government program, it’s not perfect, but I think there’s a lot of potential there.”

Final hurdles

Santa Monica still has obstacles when it comes to proving it’s truly interested in building more housing. 

In November 2022, Santa Monica’s residents — notably not the City Council — voted for Measure GS, which provided for a 5 percent transfer tax on property sales of $8 million or more, with funds going to homelessness prevention, affordable housing and schools. 

The real estate industry argued that the tax has crippled sales and new development, in similar fashion to Measure ULA in the city of Los Angeles.

“The mansion tax was not Santa Monica’s finest moment, from a housing production standpoint,” said Dave Rand, a land use attorney and partner at Rand Paster Nelson, who has worked on about 50 cases involving projects in the city. “But they have built a number of other things that are significant in the way of moving housing forward.”

An initiative to exclude multifamily sales from the tax could appear on Santa Monica ballots in November. 

Within city government itself, “you have decision-makers who are very pro-housing,” Rand said. 

Still, the city has more perceptions to change, Zwick said.

“I’ve talked to people from small contractors to big developers who tell me, ‘Oh, I did a project in Santa Monica once and I’ll never do one again,’” Zwick said. “I think that is changing in terms of the climate we’re creating. But there is still a matter of getting that message out.”

The post Santa Monica’s reputation makeover appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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Driving down the Pacific Coast Highway in Malibu, it’s hard to miss Chris Cortazzo’s name. 

The Compass broker is on the majority of listings in the affluent beachside enclave, whether the homes are up for rent or sale. The median listing price for a home in Malibu was $6 million in March 2024, according to Realtor.com. 

“I’m the luckiest human to have such control of this market,” said Cortazzo, as he sat down at Soho House’s Malibu outpost on a Wednesday afternoon in April. 

Cortazzo has been working the Malibu market for nearly three decades, closing more than $8 billion in sales over the course of his career. 

He dresses the part, understated and beachy — a blue linen shirt and sunglasses — but still emblematic of the wealth that Malibu is home to. After lunch, he drove off in a Rolls- Royce SUV.

TRD chatted with Cortazzo about growing up in Malibu, selling his first home (to Richard Gere) and the frenzy of the 2020-2021 market.

Malibu has had a lot of ups and downs. In 2018, the Woolsey Fire burned down more than 1,600 homes across Malibu. Then the luxury market rebounded in a big way.

We got wiped out by that fire. I was running around everywhere, putting out fires for every needy family. I only lost one property in the fire. My ranch unfortunately burned down. Did you ever watch “Lord of the Rings”? It was like The Shire. The Chumash Indians lived there. I had 28 acres. 

I’m rebuilding that back again. In the process, I was able to buy 200 acres behind me, with my own waterfall. I own the whole valley. 

And then Covid hit.

I thought, “Oh, my god, here we go.” The whole western side of Malibu is gone. I can’t believe we’re getting hit again. And then it turned. Everyone discovered Malibu, and I sold over $1 billion that year. It was crazy. It was like 12-, 14-hour days. I had 20 to 24 escrows at a time, continuously. I was just closing, opening. I’m really organized. I’m so precise and very hands on. I talk to my clients all the time, I give feedback. Even though I might not be on an inspection, I know all the inspection reports. I’m very type A. 

You grew up in Malibu.

I had this fairy-tale life. I actually bought the home next door to my parents and said, “I will see you all every day.” My dad left his body over 16 years ago, but he was a firefighter. My backyard was the beach. I was then a beach lifeguard and then became a model in my early 20s. I traveled the world — I was in Europe for two years, Australia for two years. I got engaged with a beautiful Australian girl. A whole fairy tale. 

But then I made a seismic shift and went in a different direction. I met Herb Ritts. In 1992, he was the most famous photographer in the world. His best friend was Richard Gere, who was married to Cindy Crawford, and the four of us traveled the world. 

How did you get into real estate?

At the end of that relationship, I wanted my own identity and got my real estate license. My first sale was to Richard Gere, in Paradise Cove. It was a $5 million sale, which today is probably $100 million. My first listing was from my first massage client — I was also a massage therapist. He gave me an $8 million listing. Massive sale, massive listing, and I was 28. 

I can’t imagine it was easy.

In 2000, I had seven escrows in January. I thought, “This is my year, this is amazing.” Most people would probably do, Eat, Pray, Love, and say, “This is not my thing.” But I think so much in life is about attitude and how you can handle disappointment. 

A lot of your listings are rentals, which pick up in the summer. What has the luxury rental market been like over the past year?

Last year was challenging, because our weather was so choppy. But we’re seeing a lot more activity this year. After Covid, everyone wanted to go to Europe. But I think everyone got it out of their system and they want to come back. We’re getting really busy. Once people experience Malibu and what it has to offer, they always end up buying. It’s a one, two punch.

Are you still in the house you bought, the one next to your parents?

Well, I tore it down. It’s my office now. I love real estate. I own a lot of property around the world. I own nine properties in Malibu. I’ve really stretched myself financially on every purchase, but every purchase has turned out to be so amazing. I believe in the Malibu market, massively. 

Besides property, is there something you spend money on?

It used to be a CD. I didn’t have a lot of money 29 years ago. There’s not a day that goes by that I don’t buy an iced latte for $10 and just say I can’t believe I could afford it. I appreciate everything. I’m literally the same guy with my massage table. I haven’t changed. I feel poor every day. I’m not kidding you. I feel poor. I race out, gravel flying in the air out of my driveway to try to make money every day. I’m very humble. You never feel like you really have it.

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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Brandywine Homes has won approval to swap out a hotel for 95 townhomes in Pico Rivera.

The city has signed off on plans by the Irvine-based developer to build the homes at 6540 Rosemead Boulevard, Urbanize Los Angeles reported. The 100-room Knight’s Inn would be demolished.

Plans for the 4-acre site call for 16 rows of three-story townhomes with two-, three- and four-bedrooms, plus parking for 214 cars. Asking prices of the future homes were not disclosed.

The project, designed by Irvine-based Danielian Associates, features white buildings with gabled Spanish-tile roofs, with balconies along the second floor. The gated complex will include a common pool.

Construction is expected to take 32 months. It’s not clear when Brandywine intends to break ground.

The townhome development would be built on the planned route of a rapid transit bus line that would run from East Pasadena to Long Beach. 

The city, whose former Ford Motor and Northrop Grumman plants were replaced by a 60-acre Pico Rivera Towne Center 11 miles southeast of Downtown Los Angeles, plans to revamp its zoning rules ahead of the bus line and a future Metro Rail stop, according to Urbanize.

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Brandywine Homes, founded in 1994 by Jim Barisic, works to revamp established neighborhoods with infill housing to replace outdated strip malls, parking lots and empty warehouses across Southern California, according to its website.

Brandywine is now developing townhomes in Whittier, Long Beach and Carson.

In 2021, the firm filed plans to build an 84-unit townhome complex on a 3.2-acre lot once owned by Long Beach’s defunct redevelopment agency at 5801 Atlantic Avenue.

— Dana Bartholomew

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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The affluent coastal city of Malibu, known for celebrity beach homes and a challenging climate for new development, has agreed to get its housing plans in order. 

Malibu’s settlement with the state will “enable the city to reach compliance with the state’s Housing Element Law,” which requires California cities plan for the development of new housing through 2029, the California Department of Housing and Community Development (HCD), Governor Gavin Newsom and Attorney General Rob Bonta said in a statement.

But, until the state determines Malibu has “adopted a substantially compliant” housing plan, developers can still file projects under the provision of builder’s remedy.

Under the deal, the city agreed to adopt a housing plan by September 23, which would allow for development of 79 housing units, including 47 affordable and low-income housing units.

While the number of units mentioned in the settlement represents just about 1 percent of Malibu’s total housing units, according to U.S. Census data, experts say the move symbolizes the state is being more proactive in enforcing housing laws.

“79 units isn’t going to solve the crisis, but the symbolism is tremendous,” said Dave Rand, a land use attorney at Rand Paster Nelson. “The symbolism is that no jurisdiction, no matter how wealthy, no matter how historically resistant to housing, no jurisdiction is immune from ous state housing laws.”

Malibu “may not deny certain low-, very low-, and moderate-income housing development projects based on the City’s current, outdated general plan and zoning code,” the state offices said in their statement. In other words, the city has to approve certain affordable projects, regardless of zoning. 

“Our housing laws are not optional; they apply to all cities and counties in California,” said Attorney General Rob Bonta in the statement. “When local jurisdictions like Malibu do their part and allow more homes to be constructed, all Californians benefit.”

Malibu, an exclusive enclave of around 11,000 residents, is the latest jurisdiction to face the wrath of the state in cracking down on housing compliance across the state, in an effort to meet their housing goals and address the ongoing housing crisis.  

Still, some housing advocates saw the settlement with Malibu as the state allowing the city to save its reputation and described it as a “bad actor” when it came to showing commitment to housing development over the years.

“If HCD and the attorney general want to let them walk back some of the nonsense and try to save some face, I understand that,” said Leora Tanjuatco Ross, a director at housing advocate and nonprofit YIMBY Action. 

While Gov. Newsom and the attorney general said the city worked with the state “in good faith” to figure out a way to come into compliance, after receiving a violation notice from the state, Tanjuatco Ross rebuked that notion. 

Malibu “struggling to allow less than 100 units of housing to be built has nothing to do with ‘good faith’,” Tanjuatco Ross said. 

While nobody expects citywide change overnight, Malibu’s decision to settle is a notable shift towards being more pro-housing development, according to observers of the city’s politics. Overcoming environmental constraints, transit issues and other challenges will be instrumental to enabling affordable housing in the city.

“Malibu has done literally nothing when it comes to the issue of producing housing or affordable housing,” Rand said, noting he’s already started bringing up the settlement with clients over the weekend.

“It’s harder now for the city to turn around to an applicant with the right property and say ‘we’re not interested in anything here and we’re going to deny a project every step of the way’.”

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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The pending closure of 99 Cents Only Stores will leave a 3.8 million-square-foot hole in Southern California. The good news for landlords: the gap may be easy to fill.

The Commerce-based discount chain, which filed for bankruptcy early this month and announced it would close all 371 stores, leaves  a legacy of opportunities for future tenants, Bisnow reported, citing local real estate brokers.

“Over the past five years, there’s just been a lack of overall quality box inventory in L.A. proper or infill Los Angeles,” CBRE Senior Vice President Jamie Brooks said. “99 [Cents Only], for all its challenges, controls some magnificent real estate.” 

99 Cents Only blamed financial trouble related to the pandemic, inflation and theft in announcing its liquidation and closure of its stores, including 164 across Southern California, according to Beta Agency. Other stores in Texas, Nevada and Arizona will also be closed.

Early reports indicated that 143 stores would close, and that an executive for Pic ‘N’ Save Bargains was recruiting investors hoping to buy and reopen the local 99 Cents outlets. It’s not clear if Mark Miller, CEO of Culver City-based Pic ‘N’ Save Bargains, has made headway on the deal.

99 Cents Only Stores was founded in 1982 by Dave Gold, who opened its first store in L.A.’s Ladera Heights, according to his 2013 obituary in the Los Angeles Times. Gold, who’d been working at a liquor store owned by his father, found that marking down surplus goods to 99 cents caused them to sell out “in no time.” 

99 Cents Only stores average 23,000 square feet, according to CoStar, putting them in a “junior box” retail category.

Vacancies are low for retail stores across the U.S. and the Southland, but are acutely low for stores of this size, Beta Agency partner Richard Rizika told Bisnow.

“Historically those leases were very competitively negotiated,” Rizika said. “There is an opportunity for a lot of the landlords to go ahead and increase rents if and when those leases were rejected by the bankruptcy court.”  

99 Cents Only Stores, now in bankruptcy, said it plans to have all its stores close by the end of May, a timeframe that many CRE professionals said seemed accelerated. 

The market may be ready to replace them. All the brokers that Bisnow spoke to said they expect the shuttered stores to be released soon.

Vacancy of retail stores across greater Los Angeles in the first three months of this year was 5.2 percent, according to JLL. The retail vacancy in Orange County was 4 percent, according to Kidder Mathews.

Though 99 Cents Only leases the vast majority of its stores, it owns 28 in California, including its store on Sunset Boulevard in Silverlake and another on Pico Boulevard in West L..A, CoStar reported. 

Barbara Armendariz, founder of SharpLine Commercial Partners, said that after 99 Cents Only Stores announced the bankruptcy, she had at least 40 calls from investors interested in possibly buying the stores. 

She also knows of at least a dozen retailers that are combing through the chain’s portfolio for opportunities. 

“They’re going to get snatched up very quickly, or as easily as the bankruptcy court allows,” Armendariz, who worked with 99 Cents Only in Los Angeles and Orange counties and the Inland Empire for more than a decade, told Bisnow.

— Dana Bartholomew

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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Jade Enterprises has listed a mostly vacant office tower in Downtown Los Angeles for sale. 

The L.A.-based investment firm has put 660 South Figueroa Street, a 24-story, 284,500-square-foot tower, on the market, according to a LoopNet listing. A team led by Newmark’s Kevin Shannon is marketing the property for sale. 

No listing price was disclosed, though the deal would be a “significant” discount to what it could cost to replace the entire building — estimated to be more than $900 a square foot, or roughly $256 million. 

Jade bought the property for $80 million in 2014, or roughly $281 a square foot, records show. The firm used a $55.4 million loan from U.S. Bank for the acquisition and refinanced with a $51.5 million loan from Acore Capital. 

The balance of the loan has shrunk to $39 million. Jade is offering the buyer a deal to assume the loan, which matures in February 2027, with the acquisition.

Jade has spent $12 million over the last 10 years to renovate the building’s common areas and on tenant improvements, according to the listing. 

The property is currently 37 percent leased — and about 12 percent of that is set to expire before 2027. No leases are scheduled to expire this year. 

Offices in Downtown Los Angeles have been trading well below what Jade paid for the building in 2018, impacted by high interest rates and the City of L.A.’s transfer taxes, known as Measure ULA. 

Earlier this month, The Swig Company sold an office complex at 617 West 7th Street for $20.5 million, or $94 a square foot, marking one of the lowest deals on a square-foot basis for an office property in the Downtown market. 

The post Jade Enterprises puts mostly vacant LA office building up for sale appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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The AIDS Healthcare Foundation has scotched a deal to buy six single-room occupancy hotels and apartment complexes on L.A.’s Skid Row for  $27 million.

The Hollywood-based nonprofit, the world’s largest charity for those with AIDS, withdrew its offer to buy the buildings containing 415 units in a receivership sale from the Skid Row Housing Trust, the Los Angeles Times reported.

The reason: AHF found the properties in need of millions of dollars in further repairs and would continue to run large operating losses, according to foundation spokesman Ged Kenslea.

The buildings scuttled in the deal include the Boyd, Hart and St. George single-room occupancy hotels, and the Lincoln, New Carver and Rainbow efficiency apartments. The deal this month had included $5 million for ongoing repairs.

“Any buyer of these properties will find themselves in the same situation that led to the failure of Skid Row Housing Trust in short order unless a new model can be developed,” Kenslea said in a statement.

The foundation pullout came hours before the City of Los Angeles filed documents in court opposing the deal.

The foundation and the city hadn’t agreed on a plan to maintain comprehensive social services for tenants and to resolve hanging health and safety code violations, according to the filing, which said the city would have withdrawn its objection if such terms had been reached.

“The city is committed, as evidenced by its $36.5 million investment in the receivership, to preserve permanent supportive housing for the city’s most vulnerable residents,” Deputy City Attorney Alia Haddad wrote in the filing. 

The unraveling of the sale could put the city on the hook to increase the funding authorized over the past year to rehabilitate and operate the buildings. It also puts the receiver back to square one in its aim to salvage the properties owned by the trust.

Jackson Wyche, a senior project manager with Receivership Specialists, the Sawtelle-based firm managing the Skid Row Housing Trust portfolio, had said the foundation’s offer was “the only viable path forward.” 

The receiver said if the AHF deal to buy the half-dozen buildings wasn’t approved by May 10, its bank account would run dry by the end of the month

“We are engaging with prospective purchasers and hope to have a new deal in place in the next two weeks (possibly sooner),” Wyche said.

Skid Row Housing Trust financially collapsed in February last year, largely forsaking its 29 buildings and 1,500 formerly homeless tenants. The city then pushed its portfolio into receivership.

Since then, the receiver has sold 11 of the troubled properties to nonprofit affordable housing providers such as LA Family Housing and People Assisting the Homeless, or PATH.

Receivership Specialists, led by Kevin Singer, has put the remaining 18 trust buildings up for sale on the condition that they remain homeless housing.

Singer said in court filings last week that three undisclosed bidders made substantive offers for the trust portfolio that were lower than the foundation’s, or involved complicated financing that the receiver believed wasn’t viable.

— Dana Bartholomew

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The post AIDS Healthcare scuttles $27M deal to buy six buildings on Skid Row appeared first on The Real Deal.

Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.

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