$71M Refinances Two Encino Properties

The Lowe Enterprises affiliate is EFC Investors Ltd., which obtained the loan to refinance Encino Financial Center, a 227,221-sf office tower and five-level, 752-space parking garage at 16133 Ventura Blvd. Paul Brindley of the Los Angeles office of Holliday Fenoglio Fowler arranged the 10-year loan, which is for interest only for the first five years. The lender is Nomura Capital & Credit Inc., a conduit specialist. Brindley says that proceeds of the loan will pay off existing debt and the related prepayment penalty cover closing costs and establish reserves. Encino Financial Center is 97% occupied by tenants including City National Bank, Barrister Executive Suites, Hartford Insurance and TD Waterhouse.

The multifamily property is the 129-unit Villa D'Este, a new complex that is under construction at 5536 Lindley Ave. Mitch Paskover of HFF, who secured the financing on behalf of Beverly Hills-based Astani Enterprises, reports that arranging the 10-year, fixed-rate loan constituted a challenge because the borrower wanted to lock in long term rates on a building that was still under construction and 100%vacant. HFF negotiated a loan that gave the borrower 100% of the proceeds at certificate of occupancy, and the borrower also didn't want to have any holdbacks for lease-up, so HFF was able to negotiate a structure where the lender didn't hold back for any lease-up. Instead, the lender required that a small portion of the loan, less than 15%, be recourse. The portion that is recourse will burn off once the project achieves certain occupancies. The loan was structured with three years interest-only and then converts to a 30-year amortization schedule. No leasing was required at closing and the lender did not require the escrow any funds for lease-up. Additionally, the loan gave the borrower a $4.5 million cash-out above cost basis.

The three-story Villa D'Este, at the southeast corner of Burbank Boulevard and Lindley Avenue, occupies a two-acre site with 240 parking spaces. The units are a mix of singles, one-bedroom/one-bath and two-bedroom/two-baths averaging 818 sf. Five of the units will be reserved for low income tenants. Residents will have access to a fitness center, spa and outdoor swimming pool.