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LOS ANGELES-Two former partners at Newport Beach-based Buchanan Street Partners, Brad Sevier and Mike Guterman, have lined up $600 million in transactions slated to close by the end of 2005 at their newly formed firm, Highland Realty Capital Inc. The new firm is providing financing through a variety of capital sources including local and national banks, investment fund managers, life insurance companies, pension funds, Wall Street sources and private investors.

In addition to principals Sevier and Mike Guterman, Highland, which has closed $130 million in transactions since its launch in September, has a new senior analyst in recently hired Deny Sepaher. Sevier and Guterman say that HRC will finance all property major types, including office, industrial, retail, hospitality, multifamily and residential subdivisions. Types of financing will include fixed-rate and floating-rate loans, construction loans, bridge financing, participating debt, mezzanine loans, joint ventures and forward commitments.

Focusing primarily on the Western United States, the principals have closed transactions in California, Colorado, Arizona, Nevada, Washington and Hawaii. Among HRC's assignments are a $149 million construction loan and an equity requirement for a residential project in Boulder, Colorado; a $28 million forward commitment for a grocery-anchored shopping center in Santa Clarita; and an $11 million permanent loan for an office-over-retail project in La Quinta.

Among the local properties for which Highland has arranged financing is Cosmo Lofts, a project to convert a 1920's furniture warehouse at 1617 Cosmo St. in Hollywood into a 50-unit development of live-work lofts. HRC has provided a 10-year, fixed-rate loan of $11 million to 1617 Cosmo Associates to finance the construction takeout of the project.

The loan involved complex structuring with multiple fundings, notes Guterman. He says that initial funding at 65% occupancy and two additional fundings at 81% and 94% occupancy allowed 1617 Cosmo Associates to lock in the permanent loan before stabilization and eliminated the interest rate risk by locking in the 10-year T-bill in the low 4% range.

In a Honolulu deal, Highland has provided a land loan of $38.5 million to Los Angeles-based developer Irongate Azrep BW LLC to acquire a 1.13-acre development parcel in the Beach Walk area of Waikiki Beach. As part of Outrigger's $200 million plus redevelopment of the Beach Walk district, Irongate is planning on developing a $400 million, 450-room condominium hotel for which construction is slated to begin in late 2006.The 38-story-plus tower will feature unobstructed views overlooking Waikiki Beach and will have walking access to all of Waikiki. Guterman calls the development parcel "among the world's prime real estate. He notes that this is the second residential land acquisition the developer has completed in Honolulu with this lender, and says the trust factor "was immensely important due to the tight closing timeframe."

Instant Insights /

Former Buchanan Partners Launch Highland Realty Capital

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