Developer Pacific Equity Properties has secured a $130 million loan for the construction of Cross Creek Ranch Malibu, a 112,000-square-foot mixed-use property in Malibu. The loan was funded by Related Fund Management and sourced by Integrated Capital Management, which has also made an equity investment in the project. The construction loan is among the largest in Los Angels County so far this year.
"Despite challenges exacerbated by a global pandemic, the extraordinary location, design and amenities offered by Cross Creek Ranch and a lot of hard work carried the day," John Carrick, co-founder and managing principal of Integrated Capital Management, tells GlobeSt.com.
Cross Creek Ranch is no ordinary development. The project is the largest to receive approval in Malibu since 1991, and the approval process was no easy road, taking several years to complete. Ultimately, the project received 5-0 approval from the Malibu Planning Commission. "After numerous fits and starts throughout the lengthy entitlement process, lenders were understandably reticent to commit time, energy and resources to underwriting Cross Creek Ranch Malibu until the last of our proposed refinements were approved," says Carrick.
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After receiving final approval in late January 2020, the developer started the underwriting process to secure funding. "Then, without warning, the state of emergency and stay-at-home orders were issued in early March, travel became severely restricted, and capital markets froze as protective and opportunistic liquidity became every financier's first priority," says Carrick.
After the lengthy entitlement process and strong optimism in the project, despite the market dislocation, the team decided to move forward with equity capital. "Rather than simply putting up a perimeter fence and waiting for capital markets to return, the stakeholders of Cross Creek Ranch elected to commence construction with equity capital in order to preserve our entitlements and to mitigate any delays due to COVID-19," says Carrick. "Of course, at the time, we did not know whether construction financing would be available again by the time Pacific Equity Properties fully expended the requisite equity. In any case, however, we reasoned it would ultimately be easier to finance an improved site rather than an unimproved one."
Ultimately both the equity and debt financing reflected the quality of the project, which will feature 70,000 square feet of retail and restaurant use, including 10,000 square feet of interior dining and 42,000 square feet of class-A office space. "Shadow anchored by Whole Foods and bookended by the Malibu expansion campus of Santa Monica College, Cross Creek Ranch Malibu will offer amenities, which are currently unavailable in the submarket," says Carrick. "More than eighty percent (80%) of Cross Creek Ranch's 12.9-acre grounds will be dedicated to landscape architecture, water treatments and gathering places to enhance the consumer experience, and the project will be served by an abundance of parking both above and below grade."
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Kelsi Maree Borland
