The Real Deal – Robert Khodadadian

Orange County has recorded its most expensive home sale so far this year: a $38 million trade of a newly developed mansion in Newport Coast.

A trust tied to Las Vegas-based Tony Huang bought 20 Coastline, an 18,300-square-foot home in Crystal Cove, according to property records filed with Orange County. Compass announced the deal on Thursday, but did not disclose the buyer or sellers. 

20 Coastline (20 Coastline via David Heath of Western Exposure)

20 Coastline (20 Coastline via David Heath of Western Exposure)

Rex McKown and Marcy Weinstein at Compass represented the seller in the off-market deal, while Michelle Queyrel Linovitz at Coldwell Banker Realty represented the buyer. 

Thomas and Annette Haigh sold the 0.8-acre site, records show. The two bought the site for $8.5 million, when it was a vacant piece of land, and built the six-bedroom, 10.5-bath home. 

The buyer signed an option to buy the new development in March 2022, records show. The home has a pool, sport court and exercise room, according to MLS data. 

Before this deal, the most expensive deal to close this year across Orange County was 7 Montage Way in Laguna Beach, according to records. Compass’ Mimi Bladow represented the buyer, according to online listings, which records show was Jonathan Caine. 

These pricey trades are boosting the median sales price of luxury homes, according to a report from appraiser Jonathan Miller for Douglas Elliman. 

The median price for homes in the upper 10 percent of sales prices was about $4.4 million in the first quarter, up from $3.7 million in the first quarter of 2023. 

Listings for homes for luxury single-family homes — the upper 10 percent of all sale prices — are also up about 11 percent year-over-year, according to a Miller Samuel report.

The post Newport Coast $38M sale marks most pricey resi trade in OC this year 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

Landlords in Los Angeles are about to get whacked with double sewer fees.

The City Council has voted 11-4 to double the fees over the next four years, despite the objections of business groups who say landlords will be disproportionately affected, the Los Angeles Times reported.

Councilmembers Monica Rodriguez, Kevin de León, Imelda Padilla and Heather Hutt voted against the rate hike.

“This sounds like a jam job,” De León said of the rate hike process.

The increase was trumpeted by the Bureau of Sanitation to fund the rising cost of construction and materials. The bureau said that labor costs will rise 24 percent over five years because of worker pay raises backed by Mayor Karen Bass and the council.

Bass’ proposed budget for the fiscal year starting July 1 depended on the rate hikes. Rodriguez told the council that the higher fees were “baked into the budget,” and called for an independent analysis from the city’s Office of Public Accountability.

Councilwoman Katy Yaroslavsky, chair of the Energy and Environment Committee, urged the council to support the increase — the first since 2020, when the council sidelined discussion of higher fees because of the pandemic.

“Unfortunately, this is one of those situations where we find ourselves between a rock and a hard place,” said Yaroslavsky, who called the fee raise “not insignificant.”

The city will notify 850,000 parcel owners about the rate increase: if most object, the hike fails because they’re considered a property use fee under Prop. 218, according to officials.

Under the increase, the bimonthly sewer charge for a typical single-family home will increase to $92.04 in October, from $75.40, according to sanitation officials. By July 2028, the rate would rise to $155.48, more than double the current rate.

For apartment buildings with four units or less, the typical charge will rise to $177 in October, from $145, and $299 in July 2028.

For buildings with five units or more, typical rates would go up to $1,047.84 in October, from $858.40, and to $1,770.08 by July 2028.

Landlords whose units are rent-controlled, meaning most of the city’s apartments, generally can’t pass on water costs, which are linked to sewer costs, to their tenants, according to city officials.

Before the council vote, business groups accused the city of failing to properly explain the need for the fee increases.

Stuart Waldman, president of the Valley Industry and Commerce Association, also called the fee hikes “rushed.” He accused officials of failing to do enough public outreach.

“This is the wrong way to do something that increases rates so drastically,” Waldman told the Times.

Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, said landlords were barred from raising rents for several years because of the pandemic, while facing other rising costs.

“Such an increase on this massive scale will prove to be yet another straw that breaks the back of the city’s rental housing providers,” Yukelson told the Times. “There’s no end in sight for such a mismanaged city with its bloated salary and overall cost structure, wasted resources and insatiable appetite to seek new and higher taxes and impose significantly higher fees on ratepayers.”

— Dana Bartholomew

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The post LA to double sewer fees, which most landlords can’t pass on to tenants 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

Rexford is not slowing down after its billion-dollar-buy from Blackstone. 

Rexford Industrial Realty has bought a warehouse in the Orange County city of Fullerton for $94.2 million, The Real Deal has learned. 

The firm paid about $338 a square foot for a roughly 279,000-square-foot warehouse at 1911 East Rosslynn Avenue, according to property records filed with Orange County. The property is fully leased, according to Rexford’s website. No loan was filed in connection with Rexford’s acquisition, making it likely Rexford paid in all cash, as it often does. 

The seller was American Realty Advisors, which had owned the building since 2005, records show. 

The deal comes less than two months after Rexford spent $1 billion to buy 48 industrial properties across Los Angeles and Orange counties from Blackstone. That deal came out to about the same on a per-square-foot basis: $332 a foot. 

Rexford has reaped the benefits of Southern California’s tight industrial market over the last few years, which came to a head in 2021, when vacancy across many Southern California industrial markets dropped below 1 percent, as consumers pivoted to more online shopping during the pandemic and companies needed extra space to store goods. 

The real estate investment trust’s  purchases have been slowing. In 2023, the firm spent $1.5 billion to acquire property in 2023, down from $2.4 billion in 2022.

The vacancy rate across Orange County industrial property was 1.5 percent in the first quarter, up 0.3 percent from the quarter prior, according to a CBRE report. However, over the last 15 years, the average has stood at above 2 percent. 

Other industrial hubs, including the nearby Inland Empire, have seen vacancy steadily rise and rents drop over the last 18 months, as more supply has come online and tenants have pulled back from expansion. 

The post Rexford buys OC warehouse from American Realty Advisors for $94M 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

Jamison Properties may be preparing to default on an $87.5 million loan tied to a 34-story office tower in Koreatown.

The Koreatown-based investor had the commercial mortgage-backed securities sent to special servicing because of an imminent maturity default linked to Equitable Plaza at 3435 Wilshire Boulevard, the Commercial Observer reported, citing a report from Trepp.

The unidentified special servicer reported that Jamison told the lender it wouldn’t be able to pay off the loan at its expected maturity date in June. The building’s loan makes up 15 percent of a CMBS conduit deal named COMM 2014-USB3, according to Trepp.

The 688,300-square-foot Equitable Plaza, also known as The Equitable Trust Building, is the 39th tallest building in Los Angeles. The Modernist tower, built in 1969 of precast limestone, concrete and glass, was renovated in 1993. 

The building had an appraised value of $150.5 million at the time of the loan’s 2014 securitization, according to Trepp.

Dr. David Lee, founder of Jamison Properties, is the building’s principal owner, and is listed as its primary contact, according to Loopnet. 

Occupancy at Equitable Plaza fell from 67 percent in 2021 to 57 percent last year, while debt service coverage dropped from 1.68 to 1.12, according to Trepp. Any number less than 1.0 indicates the property isn’t making enough revenue to meet its mortgage payments.

The building’s top tenants, Commonwealth Business Bank and Wilshire Business Center, plan to vacate the building once their leases expire in November and December.

Jamison Properties did not respond to requests for comment from the Observer.

Jamison, one of the largest multifamily landlords in Los Angeles, is the most prominent and active developer in Koreatown. For the past decade, the firm led by Lee’s daughter Jaime Lee, has converted much of its portfolio of underperforming offices into apartments.

In December, Jamison Properties’ loan on a 157,400-square-foot office complex in Encino was sent to special servicing after the landlord disclosed it needed time to figure out a way to refinance it, The Real Deal reported.

— Dana Bartholomew

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The post Jamison may default on $88M loan tied to Equitable Plaza in Koreatown 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

Madison Realty Capital wants to build a 24-story apartment building in Santa Monica on an approved site once filed as a builder’s remedy project.

The New York-based private equity firm pitched a plan in a meeting with local residents to build the 264-unit highrise at 601 Colorado Boulevard, the Santa Monica Daily Press and Urbanize Los Angeles reported.The project would necessitate bulldozing a commercial building.

If built at Colorado and 6th Street, the 260-foot building would be the tallest in Santa Monica, and three times the height of the Santa Monica Pier Ferris wheel.

Plans for the project call for a 24-story building containing 264 studio, one- and two-bedroom apartments, including 40 set aside as affordable housing, above 4,200 square feet of ground-floor shops, a fitness center, and a two-level underground garage for 103 cars.

The project, designed by Ottinger Architects, would feature floor-to-ceiling windows with rows of exterior balconies and a rooftop deck, according to a rendering.

“There have been some very significant changes to both local zoning regulations as well as state housing laws that have allowed greater densities, greater heights, greater square footages for projects that are proposing greater amounts of affordable housing,” Dave Rand, a land use attorney, told residents.  

“This project is utilizing the full extent of recent amendments to the state density bonus law to achieve effectively a doubling of the density that would otherwise be allowed under the underlying zoning regulations.”

Madison Realty acquired the site in January from NMS Properties, renamed WS Communities by owner Neil Shekhter, who signed over deeds-in-lieu of foreclosure on 28 apartment buildings and development sites to unburden itself of $1.1 billion in unpaid debt, according to The Real Deal.

Lender Madison Realty took 20 WSC properties, including 601 Colorado. 

The half-acre site was one of nine builder’s remedy projects that Santa Monica agreed to process as part of a settlement agreement with WS Communities a year ago this month. 

Builder’s remedy, a legal loophole in state housing law, allows developers to bypass zoning rules in cities that haven’t certified their state housing plans, providing they contain at least 20 percent affordable units.

While this may be the first highrise Santa Monica has seen in decades, it’s not expected to be the last. Applications for other buildings up to 18 stories in height are also under consideration by the city, according to Urbanize.

Madison Realty Capital also took over portions of the NMS portfolio outside of Santa Monica, including a recently finished apartment tower at 6401 Wilshire Boulevard in Beverly Grove. Madison has filed plans to subdivide apartments there to boost the total number of rental units.

— Dana Bartholomew

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The post Madison Realty proposes 24-story apartment tower in Santa Monica 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

Monarch Alternative Capital has taken over ownership of the limited liability company that controls the Pendry West Hollywood, a $500 million condo and hotel projects on the Sunset Strip, from developers AECOM Capital and Combined Properties, The Real Deal has learned. 

Monarch Alternative Capital, which held a $165 million mezzanine loan on the 149-key and 40-condo Pendry, took over ownership earlier this year, according to business filings with the state of California and property records filed with Los Angeles County. The property sits at 8430 Sunset Boulevard. 

AECOM and Combined still own a stake in the property, according to an AECOM spokesperson.

In the case of default, mezzanine lenders can take control of properties by filing a Uniform Commercial Code foreclosure, or can convert their debt into an equity stake. While no foreclosure notice was filed, the ownership of the limited liability company that controls the Pendry West Hollywood changed, according to state filings. No deed has been recorded with the county, signaling a complete transfer of ownership.

Monarch scored a $225 million, three-year loan with extension options from Ares Commercial Real Estate Management in connection with the deal, according to loan documents. Neither Combined nor Monarch responded to requests for comment. 

AECOM and Combined had tried to refinance a $350 million senior loan provided by Credit Suisse, which was packaged into a commercial mortgage-backed securities deal in 2021.

The firms had struggled to pay off that CMBS loan, according to data from Morningstar and commentary from loan servicer KeyBank. At the end of September, the debt service coverage ratio on the senior loan was 0 — anything below 1 indicates that the property is not making enough to meet its debt payments.

One of the major issues facing AECOM and Combined was that their hotel was not unique enough. 

“Multiple hotel competitors within a few hundred feet of the subject property is hurting the property’s overall financial performance,” servicer KeyBank wrote in commentary cited by Morningstar earlier this year.

AECOM and Combined built the property in 2021, spending more than $500 million on the project. But by last year, they were quietly trying to sell the hotel, according to a source familiar with the matter, asking about $149 million. About 60 percent of the condos were sold as of February. 

This story has been corrected to reflect that no deed reflecting change of ownership has been filed, but that Monarch took over ownership of the limited liability company that controls the Pendry West Hollywood.

The post Mezzanine lender Monarch takes stake in AECOM, Combined’s Pendry WeHo project 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

Douglas Emmett is booting hundreds of tenants from Barrington Plaza in West Los Angeles because of a city law that allows a landlord to remove rent-controlled units “permanently from rental housing use.” Only it may not.

Superior Court Judge H. Jay Ford III will decide whether the Santa Monica-based real estate investment trust obeyed the law in its eviction of 577 occupied rent-controlled units to install fire sprinklers at 11740 Wilshire Boulevard, in Sawtelle, the Los Angeles Times reported.

The judge is expected to rule on the mass eviction case in the next few weeks following a trial that began last month at the Santa Monica Courthouse. Lawyers for both sides made closing arguments at the end of April.

More than 100 people still live at the Barrington after Douglas Emmett tried to evict them last year, according to the Times.

The tenants are being evicted under the Ellis Act, a state law that allows landlords to remove tenants from rent-controlled apartments if the building is taken off the rental market. When evictions are complete, a total 712 units will be affected. 

In the case of Barrington Plaza, Douglas Emmett says that’s the plan — while at the same time admitting it might rent out the apartments in the future. The retrofit is expected to take three to five years.

“The term ‘permanently’ does not mean forever,” the company’s lawyers argued in court filings.

Uh?

State law allows landlords “the absolute right to exit the rental market, which means that the landlord’s motivation and reason for doing so does not matter,” the company argues in court filings.

At Barrington, company lawyers add there is a compelling reason to evict the tenants, according to the Times. After two major fires, the REIT needs to install fire sprinklers and make fire safety upgrades to the property.

At the heart of the case are two laws. One is the state Ellis Act, which gives landlords the right to get out of the rental business. The other is the Los Angeles Rent Stabilization Ordinance, which controls rent increases, limits permissible evictions for rent-stabilized units and says how the Ellis Act can be applied in L.A.

Tenants and their advocates see the lawsuit as a crucial effort to defend rent control in Los Angeles, according to the Times.

If companies can simply say they’re permanently removing units from the rental market, evict tenants and then re-rent the units, they say the laws have no meaning.

Peter Dreier, a professor at Occidental College, told the newspaper a decision accepting the company’s position “could be devastating for tenants in L.A., for tenants all over the state who are in rent-controlled apartments.” 

In court, Ford has said he agrees that there is “substantial evidence” that the company’s intent was to revive Barrington Plaza as apartments.

Douglas Emmett argues it would still be within the law if it later re-rents the apartments.

Its lawyers say the state Ellis Act, which doesn’t use the word “permanent,” pre-empts the city law, which does. And even if it’s not pre-empted, they say, “permanent” in its legal application to this case means “non-temporary” or “indefinite” — not forever.

They point to provisions in the law that impose requirements on landlords who re-rent properties following Ellis Act evictions.

In February, Douglas Emmett secured a $550 million construction loan, backed by the 62-year-old Barrington Plaza and three other residential properties, The Real Deal reported.

— Dana Bartholomew

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The post Judge weighs mass eviction by Douglas Emmett at LA’s Barrington Plaza 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

Commercial real estate brokerages from coast to coast are cutting costs through layoffs and efficiency measures.

As higher interest rates lower the number of transactions and eat into profits, North America’s largest brokerages have cut spending this year through “precision cost trimming,” CoStar News reported, citing regulatory earnings calls.

Brokerages ranging from Calabasas-based Marcus & Millichap to its larger publicly traded rivals, CBRE, JLL, Cushman & Wakefield, Newmark and Toronto-based Colliers have announced cost-cutting initiatives.  

To shave a buck this year, the firms have trimmed staff as hopes dwindle that the Federal Reserve will significantly lower interest rates. The total number of layoffs was not disclosed.

Pressure to trim expenses in other ways is growing as big brokerages selectively invest in talent and acquisitions to earn money by providing management and consultative services while waiting for commercial sales to rebound.

“There’s a lot of what I would call ‘quiet cutting’ going on right now,” Robert Shibuya, CEO of Dallas-based real estate advisory firm Mohr Partners, told CoStar. “I know that all of the big brokerages are still cutting because their people have been calling me for work.”

Marcus & Millichap’s decline in brokerage commissions from sales contributed to its fourth consecutive quarterly loss, even after the brokerage trimmed costs 5 percent from a year earlier to $69 million. 

CEO Hessam Nadji said market disruptions since the pandemic have upended sales and the recruiting and training of new brokers.

Investment property sales and financing fell early in the pandemic only to recover in 2021 and 2022, then dive last year as higher interest rates caused sales to dry up, Nadji said. That lower demand has resulted in higher turnover, especially for newer brokers, making it harder for the firm to expand its sales force.

“The last three- to four-year period has provided nothing resembling a typical market environment, in which we train people, mentor people and they learn the fundamentals of brokerage,” Nadji said during the company’s most recent earnings call. “This market disruption is the primary reason that skill sets aren’t developing in a way that we’re used to seeing.”

Chicago-based JLL, the world’s second-largest brokerage, credited a recent revenue surge to benefits from cost cuts coupled with growth in leasing and “resilient” businesses such as workplace and property management.

The changes helped drive a $66.1 million profit in the first quarter, compared with a $9.2 million loss in the year-earlier period, CFO Karen Brennan said in an earnings call.

“As we strengthen our service and product offerings, we will selectively add people and capabilities, both organically and through very targeted” mergers and acquisitions, CEO Christian Ulbrich told investors. 

Cushman & Wakefield, which reported a 29 percent increase in earnings over the prior-year quarter by lowering expenses and higher leasing revenue, has delivered on its cost-savings plans, Morningstar analyst Suryansh Sharma said in an email.

“Keeping a rein on expenses is essential, given the current macroeconomic challenges,” Sharma told CoStar. He said Cushman management has projected that cost and efficiency initiatives will mostly offset an increase in inflation costs this year.

While brokerage layoffs probably won’t match levels of the past two years when the businesses shed hundreds of jobs, CBRE and other companies are likely to keep reducing their employee counts in certain areas to further cut corporate costs, Shibuya added.

Despite the layoffs, the five largest global real estate services firms ranked by revenue —  CBRE, JLL, Cushman & Wakefield, Colliers and Newmark — have added employees over the years by acquiring companies not as reliant on volume sales.

They include project management, investment management, technology and engineering services.

— 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 Real Deal – Robert Khodadadian

FPM Development has inked a $42 million deal to sublease 100,000 square feet at the former headquarters of Sweetgreen in L.A.’s West Adams.

The unit of an unidentified hydrogen fuel cell company, FPM subleased the offices from the fast-casual restaurant chain at 3101 Exposition Place, CoStar News reported, citing a regulatory filing.

The salad chain pre-leased the property in 2019 and listed for sublease both the 57,000-square-foot first phase and 36,000-square-foot second phase of construction in early 2022.

FPM took over most of the initial phase at the beginning of the month, and is expected to assume the remaining offices this summer.

The sublease is set to run through February 2032, with the fuel-cell company estimated to pay a total of more than $42 million, excluding management fees or property expenses, according to CoStar.

Sweetgreen’s former hub includes lounge areas, a staff kitchen, an outdoor patio and an herb garden. It was designed by Abramson Architects to “encourage collaboration and a lively office energy.” 

It’s in a gentrifying West Adams neighborhood southwest of Downtown Los Angeles and near Culver City, a recent draw for entertainment and tech firms. It’s also near the Expo/Crenshaw Metro station and Interstate 10.

The neighborhood “has completely outperformed the rest of the market,” Asher Luzzatto, president of Luzzatto, the building landlord, told CoStar News. “There are certain micromarkets that, for different reasons, will be part of the future for Los Angeles and other cities.

“This area in particular has had a ton of success because the location is so central and transit-oriented. It’s a really critical node.”  

Sweetgreen put its headquarters on the market after evaluating its real estate needs in response to a shift to remote work. The site of its new headquarters, if any, was not disclosed. According to state business records, the firm is now based at 3102 36th Street in Los Angeles.

— Dana Bartholomew

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The post FPM inks $42M sublease for former Sweetgreen HQ in LA’s West Adams 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

BH Properties, the lending firm run by Steve Gozini, has offered a $10 million lifeline to Oceanwide Plaza to help the bankrupt project stay above water for the next few months.

China-based Oceanwide has requested the bankruptcy court overseeing its Chapter 11 reorganization approve $10 million in debtor-in-possession, or DIP, financing from BH Properties, according to a court filing last week. 

DIP financing allows a business to keep operations running as it navigates its bankruptcy filings. 

A group of contractors forced Oceanwide into bankruptcy in February, court records show, alleging Oceanwide owes about $400 million on the unfinished project in Downtown Los Angeles. Oceanwide has spent about $1.2 billion on the roughly 2 million-square-foot condo, office and residential project at 1101 South Flower Street, though it has sat idle since 2019. The structure has since gone viral, after people scaled the tower and graffitied almost every floor. 

But Oceanwide doesn’t need money to pay creditors. It needs money to keep the lights on for the time being — $7.3 million in the next 13 weeks, to pay for security, financial advisors and legal services, according to a court filing. 

BH Properties offered the one-year loan to Oceanwide as a revolver, meaning the firm can tap the financing in tranches or all at once, according to the filing. Oceanwide had reached out to 20 prospective lenders, according to court filings, though only two provided term sheets.

BH Properties did not respond to a request for comment. 

Oceanwide will pay a minimum interest rate of about 8.5 percent, according to a financing term sheet filed with the court. But the borrower won’t pay interest until the loan matures, or if it defaults. In the case of a default, Oceanwide will have to pay 18 percent in interest on the loan. 

The property is also officially up for sale, with Colliers and Hilco Real Estate hired as marketing brokers. If a sale goes through, BH Properties will be paid using those proceeds. 

If Oceanwide is not able to obtain the $10 million loan, it “would not have sufficient available sources of working capital and would be unable to administer its estate, pay its operating expenses or maintain its assets,” Oceanwide said in a court filing. 

It also needs DIP financing to pay for general liability insurance, which Oceanwide only bought in March. 

The bankruptcy court still needs to approve the financing. 

BH Properties has been focused on handing out DIP financing, mezzanine loans and receivership financing since 2020, when it formed a $200 million distressed real estate fund. 

Last year, the firm teamed up with L.A.-based Hankey Capital to lend $75 million to Joel Schreiber’s Waterbridge Capital on its acquisition of the 40-story Union Bank Plaza in Downtown Los Angeles. BH Properties held a more junior position on that loan. 

The post BH Properties offers $10M to bankrupt Oceanwide Plaza to keep lights on 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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A growing number of empty warehouses across the Inland Empire has pushed properties owned by Sun Life Financial and other investors into a valuation slump.

The Toronto-based insurer and asset manager said the value of its U.S. real estate holdings fell 15 percent in the first quarter to $1.3 billion from a year earlier, Bloomberg reported, citing an earnings call. Mark-to-market valuations were down 6.7 percent from the previous period.

The primary reason: falling rents in the Inland Empire, a key hub for big-box and e-commerce logistics, according to Randy Brown, Sun Life’s chief investment officer. 

“We had seen outsized gains there in prior quarters. This quarter, we had a cap-rate and yield decompression, which we expect, but also a drop in the achievable rents,” Brown told investors on the call.

“There had been very strong development completions and extensive growth in that specific area throughout the pandemic — which led to an oversupply bubble that’s putting downward pressure on rents.”

While vacancy rates for industrial properties across greater Los Angeles have been on the rise, Brown said that Sun Life’s properties in the IE were fully occupied, with strong tenants in extended leases. The extent of its IE holdings was not disclosed.

San Francisco-based Prologis, a major owner of warehouses in the U.S., lowered its earnings guidance this year as the landlord faces lower average occupancies, according to Bloomberg. The leasing slowdown was highest in Southern California and the Inland Empire, Chief Financial Officer Tim Arndt said on an earnings call last month.

As of January last year, some 4,000 warehouses took up 1 billion square feet of the Inland Empire, with another 170 million square feet in the pipeline, according to CalMatters. 

Industrywide, the first quarter ushered in the sixth consecutive three-month period of declining net absorption, at 27.9 million square feet absorbed nationally, according to JLL. 

Industrial vacancy also rose to 6.1 because of lower tenant demand and a rise in warehouse construction, with higher than average completions. 

By Savills’ estimate, the national vacancy rate is 6.7 percent, with some top industrial markets posting double-digit vacancies, including Savannah, Georgia, at 12.1 percent, Phoenix at 11.8 percent and Dallas-Fort Worth at 10.8 percent.

Industrial vacancy in the IE rose 1 percent to 7.8 percent in the first quarter, from the previous three months, and increased 4.9 percent year over year, according to Savills, while leasing activity dropped by 500,000 square feet.

Available sublease space jumped by 33.3 percent to more than 20.3 million square feet — the highest amount on record. Vacancy is expected to continue to increase this year, the Savills report said.

Rents for industrial real estate across Southern California have plunged for the first time since the Great Recession, according to CoStar Analytics.  At the same time, IE tenants shed more than 2 million square feet of warehouse space.

Discounted sublease space has dragged rents down as it floods the market, accounting for 21 percent of total availability across Los Angeles, Orange County and the IE combined. Typical subleases rent for 25 percent less than directly available space.

A couple of years ago, industrial vacancy in L.A. and OC was under 2 percent. Since then, industrial vacancy has grown to more than 5 percent in L.A., and 4 percent in OC.

But in Riverside and San Bernardino counties, which make up the IE, industrial vacancy reached nearly 7 percent, according to CoStar, which blamed a combination of heavy supply growth and occupancy loss, with typical asking rents falling 4 percent.

Amazon.com, considered a “first mover” in industrial real estate, could help push the nation out of its post-pandemic warehouse slump.

The Seattle-based e-commerce behemoth, among the nation’s biggest occupiers of warehouses, has restarted expansion of its logistics footprint, suggesting gains could be ahead for the industrial market.

Last month, Amazon leased two distribution warehouses of 1 million square feet each in the Inland Empire.

— Dana Bartholomew

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The post “Oversupply bubble” deflates industrial rents for the Inland Empire 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

Paradigm Developers is listing a 28,500-square-foot mansion built by a Saudi prince in exclusive Beverly Park for $89.9 million.

The Sawtelle-based firm led by Todd DeMann has listed the newly renovated mansion at 73 Beverly Park Lane, Mansion Global reported.

The 2.6-acre estate was once part of a two-mansion compound owned by the late Saudi Prince Turki bin Nasser, within the gated Beverly Hills Post Office neighborhood, home to such celebrities as Denzel Washington and Adele.

Prince Turki listed the 4.4-acre compound in 2020 for $40 million. DeMann’s firm bought the entire spread the following year for $28.5 million.

David Kramer and Andrew Buss of Hilton & Hyland are marketing the property on the 28,500-square-foot house, which is located within the city limits of Los Angeles. The mansion has nine bedrooms and 21 bathrooms, which works out to $4.28 million per lavatory. A 1.8 acre-site next door is available separately off-market, the brokers said.

The white contemporary-style home was redesigned from the ground up by Harrison Design and Mike Moser Studio, swapping its Mediterranean-style orange tile roof for what appears to be slate-gray metal.

The two-story manse, in the hills near Mulholland Drive, has sweeping views of the Pacific Ocean and the Los Angeles Basin. 

Highlights include an 18-person dining room surrounded by floor-to-ceiling glass doors, a 5,000-square-foot master bedroom, commercial-grade kitchens inside and out and an 85-foot infinity pool. There’s also an orchard of unspecified fruit varieties.

The home renovation proved controversial with neighbors, whose homeowner association sued DeMann, claiming the added cantilevered pool deck and an expanded lot broke HOA rules.

The case was settled late last month for undisclosed terms, leaving the property clear of any legal hurdles, according to Mansion Global.

The prince’s compound had been in the Saudi royal family since the mid-1990s, with both homes built in 1995.

The prince, who died in 2021 at age 72, had built a fortune over several decades, including involvement in U.K-Saudi arms deals. 

He was one of hundreds of Saudi royal family members and government officials arrested in 2017 under the direction of Crown Prince Mohammed Bin Salman as part of a claimed crackdown on corruption.

He left detention in a Riyadh Ritz Carlton in early 2018 after declaring his “absolute loyalty and allegiance” to Saudi King Salman bin Abdulaziz and Crown Prince Salman.

— Dana Bartholomew

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The post Paradigm asks $90M for Beverly Park estate once owned by Saudi prince 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

The owner behind 232 Doheny LLC is looking to construct a five-story, nine-unit multifamily building in Beverly Hills, according to an application filed with the city and reviewed by TRD.

The developer is also requesting a density bonus as part of its proposal for the site at 232 South Doheny Drive in Beverly Hills. Architect Jamsheed Sobhan and landscape architecture firm Stout Design Build are attached to the project.

Fred Ghalchi, the owner of Beverly Hills-based M&G Civil Engineering & Land Surveying, is listed as one of the owners of the site on property records. Fred Ghalchi, David Ghalchi, Minoo Forouzan, Alon Ofir and Natasha Ofir purchased the site for $2.2 million in March 2022, property records show.

According to the project filing, 15 percent of the proposed building will be allocated to very low-income housing, which will constitute a one-bedroom apartment.

This project and other recent proposed development would mark a shift in Beverly Hills’ historic reluctance to permit multifamily projects.

“Beverly Hills has blocked homes for everyone except high-income people for decades,” said Leora Tanjuatco Ross, California director at YIMBY Action. “Because of new teeth in Housing Element law as well as consequences like the builder’s remedy, this housing element cycle is the first time they’re being held accountable for allowing homes for people other than the most wealthy.”

With nine units, the 232 Doheny proposal is relatively modest compared to other builder’s remedy projects. For example, developer Leo Pustilnikov has proposed a 12-story building with 65 apartments at 246 Maple Drive in Beverly Hills. He also has filed plans for a 19-story, 165-unit building with a 73-room hotel at 125-129 South Linden Drive in the affluent city.

The post Developer proposes five-story apartment building in Beverly Hills 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

JPI has bought an approved site for 272 apartments at the redeveloped City Place mall in Long Beach.

The Texas-based developer bought 1.6 acres at Mosaic, the project that will replace the vacant City Place Long Beach shopping center at 151 East 5th Street, Urbanize Los Angeles reported.

The sellers were Mosaic owners Turnbridge Equities, based in New York; Waterford Property, based in Newport Beach; and Beverly Hills-based Monument Square Investment Group. Terms of the deal were not disclosed.

In January, the consortium won approval to build three, eight-story apartment buildings with 900 apartments, including 54 affordable units for very low-income households, plus 38,000 square feet of shops and restaurants at the 14-acre Mosaic site.

They acquired the beleaguered shopping center in March last year through the sale of a $63 million loan.

JPI acquired a site approved for 272 apartments at the southwestern corner of Long Beach Boulevard and East Fifth Street.

The eight-story project, to be called Jefferson Long Beach, includes 16 affordable units and 19,000 square feet of ground-floor restaurants and shops. Longbeachize reports that JPI is expected to break ground this year.

Brokers Kevin Shannon, Ken White, Chris Benton, Anthony Muhlstein and Gabe Munson of Newmark represented the sellers in the deal.

The trio of real estate investors will keep the rest of the mall, designed by Downtown Los Angeles-based MVE + Partners, and approved for another 628 homes. 

One parcel on the southwest corner of Long Beach Boulevard and East Sixth Street would contain a 269-unit apartment complex. Another parcel to the south would feature a 359-unit complex. 

Mosaic, which will have 150,000 square feet of additional shops and restaurants, announced new tenants, including Broken Spirits Distillery and Restaurant, Sake Secret and Coffee Station Cafe.

Irving-based JPI, founded in 1989, was acquired in October by a U.S. unit of Tokyo-based Sumitomo Forestry for $215 million.

In 2020, JPI proposed replacing the former Long Beach City Hall, a 14-story Brutalist landmark dating to the 1970s, with more than 580 homes, according to Urbanize. The firm now plans housing developments next to Metro stops in Monrovia and Inglewood.

— Dana Bartholomew

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The post JPI buys site for 272 apartments at Long Beach mall redevelopment 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, mosAic Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

The Marcus & Millichap Multifamily Forum: Southern California–now in its 13th year–has become a reliable annual gathering for local, regional and national multifamily investors, operators, developers and other professionals active in the California apartment industry. The conference tackles investment, development and management in market rate and affordable rental property industries, as well as single-family built-to-rent. Special attention this year is given to the rent control ballot and what we can do to stop it. Over 500 are expected. 

Use code TRD200 to save $200.

The post Marcus & Millichap Multifamily Forum: Southern California 2024 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

Douglas Elliman wants to sublease about 10,800 square feet of its office in Beverly Hills in an effort to consolidate its operations there. 

The brokerage has tapped its commercial branch to list two floors at 150 South El Camino Drive for sublease, according to social media posts from Douglas Elliman Commercial agent Jason Froehlich. 

The company is looking for about $5 a square foot a month, or about $54,000 a month, for the two-floor space. 

“Owing to underutilized area in our Beverly Hills office, we are consolidating our operations exclusively to the third floor of 150 El Camino Drive, giving us one cohesive space to collaborate with our colleagues and agents,” a representative for Douglas Elliman said in a statement. 

Kennedy Wilson owns the roughly 60,000-square-foot building, records show. 

The office has served as the headquarters for Douglas Elliman California and previously housed 300 agents, according to the firm’s website. 

Douglas Elliman has worked to reduce its office space since 2020 when the pandemic hit. It was still working to reduce office space last year in an effort to cut costs. However, according to financial filings, Douglas Elliman has not dramatically reduced expenses. It spent $125 million on general and administrative expenses in 2023, down from $131 million in 2022.

The average monthly asking rent during the first quarters for a Beverly Hills office was $5.20 per square foot, according to a report from brokerage CBRE. For Class A offices, the number increased to $5.45 per square foot.

The post Douglas Elliman wants to sublease 11K sf at Beverly Hills office 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, Brokerages, LA Office Market, Subleasing Los Angeles – The Real DealRead More 

The Real Deal – Robert Khodadadian

Hamilton Drive LLC and SDLP Holdings LLC, entities owned by Leo Pustilnikov, have filed an application to build an eight-story, 90-unit multifamily building in the heart of Beverly Hills, according to the plans reviewed by TRD.

This marks the sixth pending case relying on builder’s remedy in Beverly Hills for Pustilnikov, a developer who has become one of the most public advocates for the provision in an effort to get building approvals in jurisdictions resistant to new development.

The latest project, located at 214-216 South Hamilton Drive in what is already a desirable, walkable part of Beverly Hills, would be close to the new Metro D Line extension once it is completed.

Notably, the proposal for the building consists entirely of 90 studio apartments, including 18 affordable housing units.

Builder’s remedy is a legal loophole that becomes available if cities don’t have a state-approved plan to build more housing by the state-mandated deadline. Under builder’s remedy, housing projects that meet affordability criteria are automatically approved for development.

Beverly Hills muffed its deadline in October 2022, allowing Pustilnikov to file multiple builder’s remedy applications, which can be updated later. The Department of Housing and Community Development certified the City of Beverly Hills’ housing plan on May 1, closing the window for new builder’s remedy projects. 

“Now that Beverly Hills is certified, it should consider how to deal with those [applications] that were timely submitted,” Pustilnikov told TRD.

The city allocated 3,000 housing units in the plan, with about 1,600 for very low or low income residents.

While the city has expressed support for affordable housing in principle, the outcome of Pustilnikov’s project will be a good indicator of its commitment in practice. The city has 30 days to respond to the application.

“Leo’s six projects collectively offer the city a lot of affordable housing, and the hope is that they’re going to be interested in seeing more affordable housing since they’ve committed to the state to achieve some pretty ambitious RHNA [Regional Housing Needs Assessment] numbers,” said Dave Rand, an attorney at Rand Paster Nelson who advises Pustilnikov on the Hamilton Drive project. “Thus far they’ve been pretty uninterested in processing these projects.”

While some developers would be inclined to sit out the battles with the city to get their projects built or pursue development elsewhere, Pustilnikov has a long-term conviction when it comes to Beverly Hills — as the Hamilton Drive application shows.

“Because it is so exclusive and desirable, it makes it a very attractive place to invest,” Rand said. “There are cities that most developers would determine are not worth fighting for. Beverly Hills is worth fighting for.”

The post Leo Pustilnikov proposes studio-only multifamily in Beverly Hills 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, Beverly Hills Los Angeles – The Real DealRead More