Middle Market Digest: This Week in Southwest
Here’s a look at this week's trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.
BY THE NUMBERS
SAN BERNARDINO—San Bernardino County is leading the Southern California market in retail activity. The market has 844,213 square feet of new retail under construction in the region. This level of activity is even greater than the surrounding coastal markets of Los Angeles and Orange counties, making San Bernardino County a top choice for retail in the State. Some of these new retail developments include Daycreek Marketplace, in Rancho Cucamonga, which will add 100,135 square feet of retail space with CVS and Stater Brothers as anchor tenants, and Sycamore Hills Plaza, in Claremont, set to add a total of 134,000 square feet of new retail space including a new Whole Foods and CVS. Additionally, the county experienced 351,256 square feet of net absorption in the 4th quarter.
(SOURCE: CBRE; SAN BERNARDINO COUNTY)
PHOENIX—In the first quarter of 2018, vacancy in the Metro Phoenix office market was 16.8%. This marks the lowest vacancy rate since the second quarter of 2008 when it stood at 16.6%. The rate dropped 60 basis points quarter-over-quarter and 80 basis points from the first quarter of 2017. The Metro Phoenix office market continued to experience positive occupancy growth and absorbed more than 849,000 square feet during the first quarter of 2018. This marked the largest net
gain for a first quarter since 2006. Twelve out of Metro Phoenix‘s 22 office submarkets experienced occupancy gains in the first quarter of 2018. Across the market, class-A and -B office buildings recorded over 120,000 and 776,000 of positive absorption, respectively. Class-C buildings reported a loss in absorption, with -48,000 square feet. Construction in the Metro Phoenix office market remains robust in the first quarter of 2018, with 2.6 million square feet of projects currently under construction.
(SOURCE: Cushman & Wakefield)
NEW & NOTABLE
LOS ANGELES—George Smith Partners has added Antonio Hachem to its team of principals. Joining the firm’s seven other principals, Hachem brings more than a decade of specialized capital markets expertise and deep client relationships to the firm. Hachem was previously a partner with Pacific Southwest Realty Services, where he arranged more than $450 million in financing through his life
insurance company relationships.
LOS ANGELES—Akerman LLP grows its national Real Estate Practice Group with the addition of William Bernfeld in Los Angeles. Bernfeld will join the firm as a partner, and formerly worked with K&L Gates. He enhances Akerman’s core strengths in financial services and commercial real estate, with an emphasis on structured finance and financing vehicles for institutional lenders and clients across the capital stack. He is the latest addition to Akerman’s expansion in Los Angeles, which prompted the firm to relocate to The CalEdison DTLA.
LOS ANGELES—Heather Danko has launched Olive and Rose & Associates, a strategic marketing agency working with brands across the retail, automotive and entertainment sectors to provide exceptional marketing campaigns, events and employee engagement programs. Danko has over 18 years of experience in marketing, event and employee engagement. Prior to launching Olive and Rose, she worked with NewMark Merrill Companies, designing and managing all aspects of corporate marketing programs including advertising, public relations, trade shows, meetings, special events, social media and shopping center marketing. This included center and store grand openings, community festivals, and team building events. Danko has achieved the Certified Marketing Director (CMD) designation from the International Council of Shopping Centers.
IRVINE, CA—WNC has hired affordable housing veteran and chief executive officer of TCAM, Jenny Netzer, to its board of advisors. Netzer has served as chief executive officer of TCAM, an independent investment manager that provides asset management, advisory and consulting services to affordable housing owners and funders, since its founding in 2009. Previously, she spent 22 years in the affordable housing and renewable energy industries with MMA Financial and its predecessor companies, Lend Lease and Boston Financial. Netzer led the company’s affordable housing tax credit business, where under her leadership, assets under management tripled to $6 billion. She also led the development of new business for MMA Financial, where she spearheaded the firm’s entrance into the renewable energy industry. She also worked at the Commonwealth of Massachusetts and Yale University.
LOS ANGELES—CBRE has hired Jessica Curtis, a 16-year veteran of the commercial real estate industry, as SVP and Restaurant Practice Leader of Emerging Concepts. Curtis, who worked at CBRE earlier in her career and is based in Stamford, Conn., will focus on expanding restaurant brands nationally. She will also work on select assignments in Fairfield and Westchester Counties. At CBRE, Ms. Curtis will concentrate on emerging restaurant concepts, assisting brands to create real estate strategies and to establish a regional and national presence. She will work alongside David Orkin, EVP and Restaurant Practice Leader.
TEMPE, AZ—Caliente Construction has hired Steve McKendry as VP of operations and a director of retail services., McKendry joins Caliente after three years at Kraus-Anderson Construction as its vice president of field operations. He also served as senior regional pre-construction manager for Target Corporation.
Phoenix, AZ—ARA, A Newmark has hired Brett Polachek as senior managing director, responsible for originating and managing multifamily investment sales across Arizona. Polachek will work closely with Executive Managing Director Brad Goff, a veteran in the Phoenix multifamily market. With almost 20 years of industry experience, Polachek holds strong relationships with both private and institutional clients and possesses a career investment sales record of over 30,000 units and $2 billion in multifamily assets.
DEALTRACKER
LOS ANGELES—Greysteel has arranged the re-financing of Appletree Village Apartments, a 125-unit multifamily property, located in North Hills, CA. Greysteel managing director, John F. Mullen of the firm’s Los Angeles office, secured the 12-month, $9 million balance sheet bridge financing as a means to an FHA 223(f) execution on behalf of a local, Los Angeles, affordable housing developer. Appletree Village Apartments is located at 9229 Sepulveda Boulevard, North Hills, was built in 1982 and consists of two- and three-bedroom units with an average rent of $959 per unit. The North Hills neighborhood encompasses approximately 5.3 square miles in north-central Los Angeles. Originally founded as an agricultural community known as Mission Acres, North Hills is now a residential suburban community with convenient access to the employment centers of the San Fernando Valley. North Hills is home to the Veterans Administration Sepulveda Ambulatory Care Center, a comprehensive ambulatory care, education, research facility, and outpatient facility serving more than 1.4 million veterans living in Los Angeles. Neighboring communities include Arleta, Granada Hills, Lake Balboa, Mission Hills, Northridge, Panorama City and Van Nuys.
LOS ANGELES—NKF Capital Markets has secured a non-recourse, floating rate, first mortgage for The Met Hollywood, a 79-unit multifamily property and 92,000-square-foot commercial property located on Sunset Blvd in Hollywood. The mortgage was provided by Loan Core Capital based out of Greenwich, CT. The proceeds were used to refinance the existing debt for the borrower. The Met West is secured by a fully leased 79-unit newly built luxury apartment building. The Met East is secured by a 52,000-square-foot, 12-story office/residential tower, and 40,000-square-foot, 2-story creative office building. The residential tower is also improved with three large income producing graphic signs on the rooftop, east, and west. NKF Capital Markets’ assignment was to source a lender who could provide the requested leverage by understanding the various product types, and cash flow streams. Loan Core Capital was able to respond quickly and provide financing at very attractive terms given the strong sponsorship involved in the project. The team at NKF Capital Markets was led by Brian Bowis, Anthony Muhlstein, and Curtis Palmer.
PHOENIX—Escape, a 244-unit luxury apartment complex in Phoenix, has traded hands for $58.35 million. Steve Gebing and Cliff David, senior managing director, IPA, represented the seller, P.B. Bell, and procured the buyer, Weidner Apartment Homes. Built in 2016 on more than five acres, Escape is located at 4700 North 16th St. Downtown Phoenix, the Camelback Corridor, and the Central Avenue Office Corridor are within a five-mile radius. The Shops at Town & Country and Camelback Colonnade, two shopping hubs with a combined total of more than 1 million square feet of neighborhood retail and dining, are within walking distance. The property features many deluxe amenities, including a resident lounge with billiard tables and views of Camelback Mountain.
SAN DIEGO— Manchester Financial Group has secured a $44.75 million loan for the refinance of Manchester Financial Centre, a 160,000-square-foot, iconic office property in San Diego, California. Mark McGovern, Scott Peterson and Brian Cruz of CBRE’s San Diego office arranged the ten-year fixed rate loan on behalf of the borrower. Originally built in1965, the storied 12-story building houses Bertrand at Mister A’s fine dining restaurant and is the headquarters for Manchester Financial Group, located at 2550 Fifth Ave, in the submarket of Bankers Hill in San Diego. Other amenities include a fitness center, on-site coffee shop, valet parking, storage and bike racks.
LOS ANGELES—Calmwater Capital has provided $28.5 million in senior debt to an affiliate of Champion Realty Ltd, a borrowing entity owned and controlled by Bob Champion, Parker Champion and Garrett Champion, for the acquisition of a 2.76-acre property located at 801 W Adams Blvd. in Los Angeles near the University of Southern California (USC). The borrower plans to develop 100 townhomes on the property. The Calmwater-structured loan includes an initial commitment of a $15.67 million senior secured term loan and a $12.85 million delayed draw term loan for future expenses. Located a half mile from USC, the property is within the university’s security perimeter and in close proximity to its Greek Row. The future housing complex will address the undersupply of residential housing in the area.
LOS ANGELES—A class-A industrial property in Foothill Ranch, CA, has traded hands for $55.37 million to Prologis Inc. Darla Longo, Barbara Perrier, Brett Hartzell and Rebecca Perlmutter Finkel with CBRE’s National Partners West Coast team represented the seller, Institutional Advisor. CBRE’s Gregg Haly served as local market representative. The warehouse and distribution building at 50 Icon in South Orange County totals 307,781 square feet. The structure, which can be divided into separate 158,000 square-foot and 149,000 square-foot units, is currently 100% leased by Hampton Products International. The developer and manufacturer of locks, residential hardware, lighting, and travel security products has been in the building for 14 years with a lease that expires in 2023.
LAS VEGAS—Colony has acquired a two-building warehouse portfolio at Henderson Freeways Crossing in the Henderson submarket of Las Vegas, NV. Colony Industrial is the industrial platform of Colony NorthStar, a diversified global real estate investment firm with $43 billion of assets under management. The two class-A light industrial buildings at Henderson Freeways Crossing, located at 8385 and 8390 Eastgate Road in Henderson, NV, south of Las Vegas, total 363,450 square feet. These recently constructed buildings are 45% leased to five high-quality tenants. The buildings are strategically located with immediate access to Interstate 215 (Las Vegas’ perimeter highway) and Interstate 515 (north-south corridor from downtown Las Vegas), which provide convenient access to Interstate 15 (major national north-south corridor).
SAN DIEGO—Aaron Beck, VP of NorthMarq Capital’s San Diego regional office, has arranged a $16.29 million refinance of a newly developed multifamily property located in Lemon Grove, California. The financing was arranged for the borrower through NorthMarq’s relationship with Fannie Mae. The newly completed apartment project is located in a market with very high demand for apartments, and benefits from its close proximity to downtown San Diego, San Diego State University, Naval Base San Diego and other major employment centers including Mission Valley.
PHOENIX—A 198,771-square-foot industrial park located near Phoenix Sky Harbor International Airport has traded hands for $23 million. The Meritex Company, a Minneapolis-based commercial real estate investment company purchased the two-building property from Chicago-based Clarius Partners, LLC. Cooper Fratt and John Werstler with CBRE’s Phoenix office represented both the buyer and seller in the transaction. Built in 2017, Meritex Park Sky Harbor is a Class A, 12-acre property located on the southeast corner of University Drive and 16th Street in Phoenix. The property is currently 70% leased and consists of a 68,220-square-foot north building and a 130,421-square-foot south building, which is fully leased to WR Group, American Furniture Rental and CallBox.
WESTLAKE VILLAGE, CA—A two-story, 53,133-square-foot corporate headquarters office building has traded hands for $11 million. Lee & Associates Principal Joe Jusko represented K-Swiss, the seller of the property located at 31248 Oak Crest Drive in Westlake Village, and Lee President Mike Tingus and managing director Grant Fulkerson, SIOR represented the buyer, an entity of Selleck Development Group (SDG). The building was constructed as a build-to-suit for athletic footwear maker K-Swiss, and the company had occupied it from 1999 until it relocated to downtown Los Angeles. The property was constructed as a multi-tenant building giving K-Swiss a high-image corporate headquarters with room to expand as the company grew. SDG principals, Dan Selleck and his son Dan Selleck Jr., saw in the building an opportunity to invest in one of the few high-image office properties in the Conejo Valley. The investors plan to renovate the common areas and parking lot, enhance the landscaping and replace the existing solar panels, creating a cost-effective, modern office building.
BUILDING BLOCKS
PHOENIX—The Statesman Group is bringing $200 million in luxury residential real estate developments in Desert Ridge next month, which will be available for purchase or rent. The projects include The Luxe at Desert Ridge, 223 condominiums, and The Montreux, 335 apartments. The Luxe occupies 10 acres on the west side of the property while The Montreux sits on nine acres on the east side. They are separated by Toscana of Desert Ridge, Statesman’s nearly sold-out condominium community with less than 10 of 677 residences remaining available for purchase. The property is directly across from the restaurants, bars and retailers on High Street and adjacent to Desert Ridge Marketplace. With move-ins expected spring 2019, The Montreux started construction in Jan. and will be comprised of 335 one-, two- and three-bedroom luxury apartments ranging in size from 805 to 1,518 square feet, plus a robust lineup of resort-style amenities. Leasing will begin later this year and rents are expected to start from $1,475 per month.