LOS ANGELES—Three investment partners havesecured $22 million in permanent financing loansfor five separate retail properties in the fashiondistrict of Downtown Los Angeles. The individual loans range invalue from $1.1 to $8.4 million. The identity of the borrowers andthe addresses of the properties are confidential.

The funds from each of the loans will be used torecapitalize the assets. One of the loans was asecond trust deed mortgage cash-out with a three-year term and a4.5% interest rate. “The rate is kind of unheard of in thismarketplace,” Jonathan Hakakha, managing directorof Quantum Capital Partners, tells GlobeSt.com.“The income of the property has doubled in the last three years. Itis a 150,000 square foot building that was used bystorage, wholesale andshipping facilities, who would pay $0.30 to $0.50per foot on 20,000 to 60,000 square feet. As these tenants vacatedthe building, the landlord broke the space down into smaller spacesto rent them at a lot higher cost per square foot.”

The remaining loans have a seven-year term with a five-year,fixed interest rate at 4%. These low rates allow the borrowers toreduce their capital costs by 210 basis points. “The challengealways in the garment district is the fact that these tenants areon short term leases, and in some cases in month-to-month leases,so we really had to demonstrate that these buildings have beenstable historically and will continue to be stable,” says Hakakha.“A lot of lenders shy away from that marketplace because of theshort-term lease roll of the buildings.” He notes that not each ofthe three investors served as a borrower on each of the fiveloans.