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Tag: Cmbs

  • Hackman, Affinius score $75M refi on Amazon-leased Culver Steps 

    Hackman, Affinius score $75M refi on Amazon-leased Culver Steps 

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    Lease a property to one of the biggest companies in the world — and L.A.’s hottest chains — and the financing will follow.

    Hackman Capital Partners and Affinius Capital have scored a $75 million loan to refinance Culver Steps, a 121,000-square-foot office and retail project in Culver City, according to property records and a report from Fitch Ratings. 

    Deutsche Bank and Wells Fargo provided the five-year loan, which has a fixed interest rate of 6.62 percent, according to the Fitch report. About 45 percent of the loan was packaged into a commercial mortgage-backed securities deal. 

    Hackman and Affinius — the formal name for a joint venture between USAA Real Estate and Square Mile Capital Management — completed the development in 2019. Wells Fargo, in an appraisal tied to the loan issuance, has pegged the project’s value at $130 million, or more than $1,000 a square foot. 

    Amazon.com leases the entire 80,000-square-foot office portfolio of the building, under a deal that expires in 2031, according to Fitch. The e-commerce giant has invested more than $10 million into the space. 

    Erewhon, a luxury grocer, holds a lease for about 15,000 square feet of the retail portion through 2038. Other retail tenants include ice cream shop Salt & Straw, Mendocino Farms and Sephora. 

    And the tenants have been a boon for the development. 

    The property’s net operating income soared 41 percent from 2022 to 2023, hitting $6.1 million at the end of the year. The lenders underwrote the deal with expectations net operating income will reach $8.6 million a year, according to Fitch. 

    Deutsche Bank’s new loan comes as the German bank works to dump about $1 billion worth of loans tied to commercial real estate in the U.S.

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    Isabella Farr

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  • Brookfield’s $400M DTLA Office Loan Heads to Special Servicer

    Brookfield’s $400M DTLA Office Loan Heads to Special Servicer

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    Brookfield Asset Management is once again in hot water with a lender for a big downtown Los Angeles office tower.

    The alternative investment giant’s lender for its 1.4 million-square-foot Bank of America Plaza office tower at 333 South Hope Street has transferred a $400 million debt secured by the property to a special servicer, which is usually a sign that a lender foresees a growing chance of a borrower failing to pay off a loan before its maturity.

    The loan was transferred to special servicing in recent weeks, according to Morningstar. The landlord’s looming trouble with the debt stems from losing its third-largest tenant, law firm Sheppard Mullin Richter, which has long rented space within the Bank of America Plaza before inking a 119,000-square-foot lease last year across the street at CIM Group’s 350 South Grand Avenue.

    Sheppard’s lease in Brookfield’s tower expires at the end of the year and the firm plans to vacate, which will pull the property’s occupancy below 70 percent, according to Morningstar.

    Brookfield didn’t return a request for comment.

    Sheppard Mullin accounts for about 13 percent of the building’s net rentable area, according to a May Fitch Ratings report, and is the building’s third largest tenant. The law firm’s lease ends in December after which it reportedly makes the move to CIM Group’s City National 2CAL building at 250 Grand Avenue.

    Sheppard Mullin’s expected departure comes after another law firm, Alston & Bird, left the building after its lease expired in December.  

    That leaves the office tower with Capital Group Companies, which occupies about 27 percent of the net rentable area, as a key tenant. Its lease expires in February 2033, according to Fitch. 

    ​​It’s the latest hit to Downtown’s office market.  

    The area’s second-quarter vacancy rate sat at 32 percent, according to a market report from CBRE. The submarket’s also the most pressured, in the red by about 490,000 square feet and leading the negative net absorption for the greater Los Angeles area in the quarter, CBRE reported.

    Brookfield’s debt on the property matures in September, and refinancing L.A. office towers before the clock runs out has already proven difficult for Brookfield, amid waning demand for commercial real estate due to remote work trends and rising interest rates cutting into real estate values.

    Last year, the landlord lost control of two L.A. towers — the Gas Company Tower and EY Plaza — to a court-appointed receiver due to debt trouble, and it was in technical default on 777 Tower, even as it continued to service debt on the latter. The Gas Company and 777 Tower properties have since been marketed for sale by their respective receivers, but a potential buyer pulled out of a deal to buy 777 Tower earlier this year at a huge discount from its $319 million in debt.

    As of May, the borrower hadn’t disclosed how it plans to handle the Bank of America Plaza maturity or pursue refinancing, according to Morningstar.

    The likelihood of Brookfield failing to pay off the $400 million loan for 333 South Hope on schedule is no surprise to its lender. Fitch Ratings last year labeled the loan with a heightened risk of maturity default, and Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup — which collectively originated various portions of the property’s debt — were already reporting a loss on the deal.

    Read more

    JLL tapped to market Gas Company Tower in DTLA for sale


    Brookfield Deal to Sell 777 Tower in Downtown LA Collapses

    Brookfield’s deal to sell 777 Tower in Downtown LA collapses


    333 South Hope Street in LA

    Another Brookfield DTLA tower loan faces “maturity default risk”


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    Sam Lounsberry, Kari Hamanaka

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  • Orange County Hotelier Falls Behind on Anaheim Marriott Loan

    Orange County Hotelier Falls Behind on Anaheim Marriott Loan

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    Tushar Patel, the Orange County hotelier who once ranked as the second-largest property owner in Anaheim behind Disney, has fallen behind on an $80 million loan tied to the Anaheim Marriott. 

    An entity controlled by Patel is more than 90 days delinquent on the loan, which currently has a balance of $69.8 million, according to Trepp data. The last payment on the debt came through in December. 

    Patel did not respond to a request for comment. 

    JPMorgan Chase Bank originated the loan in 2014 to refinance the 1,030-key hotel at 700 West Convention Way. The debt was then packaged into a commercial mortgage-backed securities deal. 

    The fixed-rate loan has an interest rate of 4.8 percent. That’s lower than the secured overnight finance rate — a standard benchmark rate for lending — over the last year.

    The loan was modified in 2020, when Patel requested financial relief in light of the pandemic, according to Trepp data. At the time, the property, which sits beside the convention center and just south of Disneyland, was only making about half of what was needed to service the debt. 

    But the property’s income snapped back with a vengeance. By 2023, the hotel was making five times what was needed to service the debt. It’s unclear what drove the delinquency. 

    The loan is set to mature in June, though the Patel entity has extension options. 

    Patel bought the property in 1999 for about $80 million, the Los Angeles Times reported at the time, marking his biggest deal to that point. 

    T2 Hospitality, the Patel family’s main company, owns the Springhill Suites by Marriott in Anaheim and a Residence Inn by Marriott in Anaheim. It has other hotels in Palm Springs, San Diego, Sunnyvale and Palo Alto. Its website lists the Anaheim Marriott as a “previous project.”

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    Isabella Farr

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  • CalSTRS scores $70M Refinance on West LA Office Building

    CalSTRS scores $70M Refinance on West LA Office Building

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    Not all office buildings have trouble finding new money. 

    The California State Teachers’ Retirement System has scored a $70 million loan to refinance its 337,400-square-foot office building at 11755 Wilshire Boulevard, according to property records filed with Los Angeles County. 

    Wells Fargo Bank provided the senior mortgage — of which $51.5 million is slated to be packaged into a commercial mortgage-backed securities deal, according to a KBRA report and Trepp data. The CMBS pool, expected to total about $519 million, is set to close next month. 

    The loan, which expires in 2029, was used to pay off previous debt from Northwestern Mutual, according to KBRA. CalSTRS also put in about $960,000 to help pay off the loan and fund reserves for tenant improvements. 

    Brokers, investors and developers all say lenders are extremely picky right now when it comes to lending on office properties, given the prominence of remote work and tenants continuing to shrink space. 

    The lenders out there are handing out debt at lower loan-to-value ratios, requiring owners to front more equity. 

    On the Wilshire deal, Wells Fargo disclosed to KBRA that it gave out the loan at a 43 percent loan-to-value ratio. In 2019, the National Association of Realtors reported that about 70 percent of loans had loan-to-value ratios of 75 or 80 percent.

    As of this month, the office building was 63 percent leased, with average rents of about $60 per square foot a year — higher than West L.A.’s average asking rents of about $56 a foot in the third quarter. 

    The property’s largest tenant, Kinetic Content, has a lease expiring in 2026, but has a five-year renewal option. 

    In June, an entity linked to LaSalle Investment Management, which manages the building on behalf of CalSTRS, filed a lawsuit against Braunstein & Braunstein, claiming the law firm owed $920,000 in back rent at the building. 

    Cash flow at the property has risen steadily since 2021, when it took a hit, according to the KBRA report. 

    The building reported net cash flow of $7.9 million from January through October last year, up from $7.7 million for the entire 12 months of 2022. 

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    Isabella Farr

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