Middle Market Digest: This Week in Southwest

LOS ANGELES—The year is coming to a close, but there are still many deals to be done. This week, there were a number of acquisitions, dispositions and loan closings across asset classes. Take a look to see what is happening across the Southwest.

BY THE NUMBERS

LOS ANGELES—Job growth in Los Angeles is expected to continue through 2017, according to a new report from Beacon Economics, which says the L.A. market is not overheated. Los Angeles County's steady job growth is expected to continue expanding at rate similar to recent years, reaching a high of 1.9% growth in 2017. Strong tourism demand is helping drive both employment and spending. On the other hand, job growth in the South Bay market is cooling. South Bay job growth has slowed compared to recent red hot years, but at 3.3% growth over the past year, would still be considered robust by most measures. Our forecast has regional employment continuing to cool in 2017.

(SOURCE: THE REGIONAL OUTLOOK)

NEW & NOTABLE
SAN DIEGO—Sunrise Management has promoted former PETCO executive Marc Corless to chief people officer. Previously the director of human resources for the growing San Diego-based firm, Corless will take charge of all aspects of human resource administration and management for Sunrise. With a 30-year background in corporate human resources, Corless was most recently vice president of human resources for WIS International and worked in the same capacity for 11 years at PETCO Animal Supplies. He has also held executive level positions with Liquid Investments and Cipher Data Products. With significant experience on a multi-state level, he will continue to lead and develop human resources operations for Sunrise locally, regionally and nationally.

LOS ANGELES—Gelt Inc., a Los Angeles-based multifamily real estate investment and asset management firm, has named Josh Satin as Asset and Acquisitions Coordinator. Satin will be responsible for investor relations and working with Gelt's team to identify and acquire apartment properties. Satin, 31, joins an entrepreneurial group of young and successful professionals that has acquired more 5,600 apartment units valued at more than $800 million since the firm was founded in 2008 by partners and cousins Keith Wasserman, 32, and Damian Langere, 36. Gelt is on target to reach $1 billion of investment activity by mid-2017.

NEWPORT BEACH, CA—The Saywitz Co. has named Joe Poncino as SVP of construction. Poncino has been with The Saywitz Company since 2001. He has more than 40 years of experience in the construction industry.

LOS ANGELES—CBRE's Lilian Cavaleri, business manager for the company's Microsoft account; and Eric Chen, first vice president, Investment Properties, Capital Markets, have taken leadership roles in CBRE's Asia Pacific American Forum. Cavaleri and Chen will serve as the Co-Chairpersons of the company's newest employee network group. Founded in 2015, APAF is focused on helping CBRE attract, develop and retain Asian-Pacific-American talent while advancing its business to serve the Asia Pacific marketplace. APAF is creating professional development opportunities to help members build skills and advance their careers. It will also support CBRE regions through volunteer and charity events.

BEVERLY HILLS, CA—Douglas Elliman Real Estate today announced top Los Angeles real estate broker Scott Segall has rejoined the firm. Ranked as a top producing agent in Los Angeles by Douglas Elliman, Segall has consistently achieved record-breaking sales throughout the region. His experience spans a number of Los Angeles' most sought-after neighborhoods, working extensively with buyers and sellers in West Hollywood, the Sunset Strip and Beverly Hills. A well-known and successful real estate agent, Segall returns to Elliman from Compass' Beverly Hills office. His current focus is mid-market luxury homes throughout Los Angeles ranging from $1 million to $10 million.

NEWPORT BEACH—Stewart I. Weston has joined CBRE Capital Markets as EVP. Based in Newport Beach, Mr. Weston will focus on enhancing the firm's institutional multifamily investment sales presence across Southern California. Weston is an accomplished real estate professional with more than 25 years of experience in multifamily investment sales. He will report to Chris Akins, senior managing director, CBRE Capital Markets, who has responsibility for the firm's multifamily sales platform in the U.S. Weston joins CBRE from Marcus & Millichap where he was responsible for apartment investment sales in the region. During his tenure at Marcus & Millichap, Weston transacted in excess of $3 billion in sales. John Montakab VP and two support staff also join Weston at CBRE.

DEALTRACKER
LOS ANGELES—Champion Real Estate has acquired The Bard Apartments, a 30-unit apartment complex in Koreatown. Located at 756 S. Normandie Ave., the property is nearly fully occupied, and offers a mix of 23 studios and 7 one-bedroom units. The property is subject to the City of Los Angeles Rent Stabilization Ordinance. Champion plans to renovate the units as they become available and will upgrade the exterior, common areas and property amenities. Prior to acquisition, several units had been renovated as part of a modest value-add improvement program.

SCOTTSDALE, AZ—An entity owned by Caliber Distressed Real Estate Income Fund and managed by Caliber Hospitality has acquired the Hilton Phoenix Airport Hotel for $37.7 million. This is the firm's largest acquisition to date. The four-story property has 259 guest rooms and is adjacent to another Caliber-owned property, the Phoenix Sky Harbor International Airport. The property recently underwent an $8 million renovation and Caliber will invest an additional $750,000 to update the restaurant, bar and other common areas as well as parking lot improvements. The hotel features over 10,000 square feet of meeting/convention space including an amphitheater ideal for presentations. It also has a full service restaurant with room service, great hotel bar and happy hour, and outdoor pool and meeting areas.  Beyond traditional airport business, the Hilton captures strong market and significant occupancy demand with 50 million square feet of neighboring office/industrial space and surrounding corporate clients.

SAN DIEGO—CBRE's San Diego office is joining the firm's Workplace 360 model. The firm's office is relocating to Westfield's UTC Shopping Center The CBRE office will occupy the entire 32,336-square-foot third floor of a newly developed building that is part of Westfield UTC's ongoing expansion and revitalization. Located at the intersection of La Jolla Village Drive and Genesee Avenue, the building is situated as a primary entrance of the center and will include a concierge staff and valet service for CBRE employees and clients.

LOS ANGELES—Dekel Capital has secured a $20 million bridge financing loan on behalf of an unnamed borrower for the acquisition of an obsolete retail center in Granada Hills, CA. The 8-plus acre site is situated in a desirable location for a mixed-use development in the San Fernando Valley. The existing retail center is currently 79% occupied, lacks a conventional anchor tenant and has considerable deferred maintenance. As a result, the property was not suitable for traditional bank financing. Dekel Capital structured a $20 million, 12-month, non-recourse bridge loan with Buchanan Street Partners that will allow the sponsor to redevelop or reposition the existing retail center.

SALT LAKE CITY, CA—CBRE has arranged a $16.75 million bridge loan on behalf of Vectra Management Group for the purchase of a class-A office building in Los Angeles, California. Located at 640 North Sepulveda in Los Angeles, the 43,396-square-foot property was purchased in an auction from UC Regents for a total price of $17.06 million. Doug Birrell, first vice president with CBRE Capital Markets Debt & Structured Finance, arranged the acquisition financing for Vectra. The property was vacant upon purchase; however, the building was previously occupied by major tenants, including DreamWorks, Electronic Arts and Mark Burnett Productions. Given its location in Bel Air, abundant secured parking and attractive patio space, the property is well positioned to appeal to today's creative office space users. Vectra plans to invest significant money into the property to further upgrade the common areas and re-lease the property—potentially to another media or tech tenant.

PHOENIX, AZ—Gateway Mini-Storage, located at 5750 S. Power Road, in Gilbert, Ariz., recently traded hands between Circle G Property Development and CubeSmart LP for $14 million, a price of $150.77 per square foot based on existing net rentable square footage. NAI Horizon SVP Denise Nunez marketed the property on behalf of the seller. Nunez also secured the buyer, a national self-storage real estate investment trust. The price is the third-highest recorded for a single Arizona self-storage property.

RANCHO SANTA MARGARITA, CA—Institutional Property Advisors Capital Markets has arranged $19.6 million in debt on behalf of an unnamed borrower for the acquisition of Buena Vida at Town Center, a 115-unit, 55-plus age-restricted multifamily property in Rancho Santa Margarita, California. The loan was structured at a fixed rate of 3.25% interest with the first three years interest-only, then after converting to a 30 year amortization. The term of the loan is 15-years with a 67% loan-to-value.

SAN DIEGO—Hanalei Associates LLC, with Multi-Ventures Inc. as managing member sold the 419-room Crowne Plaza Hanalei for an undisclosed price to a private client of Brighton Management. Located in Mission Valley at 2270 Hotel Circle North in San Diego, the hotel is situated on nearly ten acres of prime San Diego real estate. The iconic Mission Valley landmark will continue under the Crowne Plaza flag with significant renovations and upgrades planned for the property. The 419-room, full-service Hanalei is strategically located along Interstate-8 and Mission Valley's Hotel Circle with easy access and proximity to the world-famous San Diego Zoo, SeaWorld, Old Town, Downtown/Gaslamp Quarter and San Diego beaches. CBRE Hotels' Bob Kaplan and Rod Apodaca, senior vice presidents in Newport Beach, represented the seller in this transaction. Brighton will manage the property.

LOS ANGELES—Rexford Industrial Realty has acquired a two-building industrial project for approximately $24.4 million. Located at 12320 4^th Street in Rancho Cucamonga, the property has two distribution buildings totaling 284,676 square feet on 16.5 acres and is currently 100% leased on an absolute triple net basis.  The tenant is a national manufacturer and distributor of commercial-use plastic bags. The buildings provide 26-foot to 28-foot ceiling clearance ESFR fire sprinkler systems, and are in close proximity to major freeways, offering a compelling value proposition for infill distribution. Rexford purchased the property with funds from the disposition of two industrial properties for a total of approximately $19.0 million.

LAS VEGAS—DK Loft 5 LLC has sold the Loft 5, a 241-unit luxury multifamily asset in Las Vegas to Steppe Bros for $51.5 million. Loft 5 is a luxury community featuring four resort-style pools and hot tubs, outdoor fireplaces and grills, a fitness center and steam room and a club lounge. In-unit amenities include12- or 20-foot ceilings, natural stone countertops, designer cabinets, bamboo hardwood flooring, washer and dryer, kitchen islands with a gas range, and built-in Sub-Zero refrigerators. All units also include private balconies or terraces. JLL EVP John Cunningham and SVP Charles Steele led the JLL team on the deal.

BUILDING BLOCKS
VICTORVILLE, CA—Stirling Development has broken ground on Distribution Centre 18, a 370,023-square-foot industrial facility in Victorville. The property is located at Southern California Logistics Airport, an 8,500-acre multimodal freight transportation hub that includes a 2,500-acre commercial and industrial complex entitled for 60 million square feet of development. While construction has just begun, the facility has already been 42% pre-leased to Plastipak Packaging Inc. Plastipak will use the facility for warehousing needs and plans to expand its presence within SCLA once the property is completed in summer 2017. Plastipak currently occupies more than 312,000-square feet within SCLA including two small warehouse locations and one 296,490-square-foot manufacturing facility. Jay Dick of CBRE is handling leasing on behalf of Stirling Development.

LOS ANGELES—The year is coming to a close, but there are still many deals to be done. This week, there were a number of acquisitions, dispositions and loan closings across asset classes. Take a look to see what is happening across the Southwest.

BY THE NUMBERS

LOS ANGELES—Job growth in Los Angeles is expected to continue through 2017, according to a new report from Beacon Economics, which says the L.A. market is not overheated. Los Angeles County's steady job growth is expected to continue expanding at rate similar to recent years, reaching a high of 1.9% growth in 2017. Strong tourism demand is helping drive both employment and spending. On the other hand, job growth in the South Bay market is cooling. South Bay job growth has slowed compared to recent red hot years, but at 3.3% growth over the past year, would still be considered robust by most measures. Our forecast has regional employment continuing to cool in 2017.

(SOURCE: THE REGIONAL OUTLOOK)

NEW & NOTABLE
SAN DIEGO—Sunrise Management has promoted former PETCO executive Marc Corless to chief people officer. Previously the director of human resources for the growing San Diego-based firm, Corless will take charge of all aspects of human resource administration and management for Sunrise. With a 30-year background in corporate human resources, Corless was most recently vice president of human resources for WIS International and worked in the same capacity for 11 years at PETCO Animal Supplies. He has also held executive level positions with Liquid Investments and Cipher Data Products. With significant experience on a multi-state level, he will continue to lead and develop human resources operations for Sunrise locally, regionally and nationally.

LOS ANGELES—Gelt Inc., a Los Angeles-based multifamily real estate investment and asset management firm, has named Josh Satin as Asset and Acquisitions Coordinator. Satin will be responsible for investor relations and working with Gelt's team to identify and acquire apartment properties. Satin, 31, joins an entrepreneurial group of young and successful professionals that has acquired more 5,600 apartment units valued at more than $800 million since the firm was founded in 2008 by partners and cousins Keith Wasserman, 32, and Damian Langere, 36. Gelt is on target to reach $1 billion of investment activity by mid-2017.

NEWPORT BEACH, CA—The Saywitz Co. has named Joe Poncino as SVP of construction. Poncino has been with The Saywitz Company since 2001. He has more than 40 years of experience in the construction industry.

LOS ANGELES—CBRE's Lilian Cavaleri, business manager for the company's Microsoft account; and Eric Chen, first vice president, Investment Properties, Capital Markets, have taken leadership roles in CBRE's Asia Pacific American Forum. Cavaleri and Chen will serve as the Co-Chairpersons of the company's newest employee network group. Founded in 2015, APAF is focused on helping CBRE attract, develop and retain Asian-Pacific-American talent while advancing its business to serve the Asia Pacific marketplace. APAF is creating professional development opportunities to help members build skills and advance their careers. It will also support CBRE regions through volunteer and charity events.

BEVERLY HILLS, CA—Douglas Elliman Real Estate today announced top Los Angeles real estate broker Scott Segall has rejoined the firm. Ranked as a top producing agent in Los Angeles by Douglas Elliman, Segall has consistently achieved record-breaking sales throughout the region. His experience spans a number of Los Angeles' most sought-after neighborhoods, working extensively with buyers and sellers in West Hollywood, the Sunset Strip and Beverly Hills. A well-known and successful real estate agent, Segall returns to Elliman from Compass' Beverly Hills office. His current focus is mid-market luxury homes throughout Los Angeles ranging from $1 million to $10 million.

NEWPORT BEACH—Stewart I. Weston has joined CBRE Capital Markets as EVP. Based in Newport Beach, Mr. Weston will focus on enhancing the firm's institutional multifamily investment sales presence across Southern California. Weston is an accomplished real estate professional with more than 25 years of experience in multifamily investment sales. He will report to Chris Akins, senior managing director, CBRE Capital Markets, who has responsibility for the firm's multifamily sales platform in the U.S. Weston joins CBRE from Marcus & Millichap where he was responsible for apartment investment sales in the region. During his tenure at Marcus & Millichap, Weston transacted in excess of $3 billion in sales. John Montakab VP and two support staff also join Weston at CBRE.

DEALTRACKER
LOS ANGELES—Champion Real Estate has acquired The Bard Apartments, a 30-unit apartment complex in Koreatown. Located at 756 S. Normandie Ave., the property is nearly fully occupied, and offers a mix of 23 studios and 7 one-bedroom units. The property is subject to the City of Los Angeles Rent Stabilization Ordinance. Champion plans to renovate the units as they become available and will upgrade the exterior, common areas and property amenities. Prior to acquisition, several units had been renovated as part of a modest value-add improvement program.

SCOTTSDALE, AZ—An entity owned by Caliber Distressed Real Estate Income Fund and managed by Caliber Hospitality has acquired the Hilton Phoenix Airport Hotel for $37.7 million. This is the firm's largest acquisition to date. The four-story property has 259 guest rooms and is adjacent to another Caliber-owned property, the Phoenix Sky Harbor International Airport. The property recently underwent an $8 million renovation and Caliber will invest an additional $750,000 to update the restaurant, bar and other common areas as well as parking lot improvements. The hotel features over 10,000 square feet of meeting/convention space including an amphitheater ideal for presentations. It also has a full service restaurant with room service, great hotel bar and happy hour, and outdoor pool and meeting areas.  Beyond traditional airport business, the Hilton captures strong market and significant occupancy demand with 50 million square feet of neighboring office/industrial space and surrounding corporate clients.

SAN DIEGO—CBRE's San Diego office is joining the firm's Workplace 360 model. The firm's office is relocating to Westfield's UTC Shopping Center The CBRE office will occupy the entire 32,336-square-foot third floor of a newly developed building that is part of Westfield UTC's ongoing expansion and revitalization. Located at the intersection of La Jolla Village Drive and Genesee Avenue, the building is situated as a primary entrance of the center and will include a concierge staff and valet service for CBRE employees and clients.

LOS ANGELES—Dekel Capital has secured a $20 million bridge financing loan on behalf of an unnamed borrower for the acquisition of an obsolete retail center in Granada Hills, CA. The 8-plus acre site is situated in a desirable location for a mixed-use development in the San Fernando Valley. The existing retail center is currently 79% occupied, lacks a conventional anchor tenant and has considerable deferred maintenance. As a result, the property was not suitable for traditional bank financing. Dekel Capital structured a $20 million, 12-month, non-recourse bridge loan with Buchanan Street Partners that will allow the sponsor to redevelop or reposition the existing retail center.

SALT LAKE CITY, CA—CBRE has arranged a $16.75 million bridge loan on behalf of Vectra Management Group for the purchase of a class-A office building in Los Angeles, California. Located at 640 North Sepulveda in Los Angeles, the 43,396-square-foot property was purchased in an auction from UC Regents for a total price of $17.06 million. Doug Birrell, first vice president with CBRE Capital Markets Debt & Structured Finance, arranged the acquisition financing for Vectra. The property was vacant upon purchase; however, the building was previously occupied by major tenants, including DreamWorks, Electronic Arts and Mark Burnett Productions. Given its location in Bel Air, abundant secured parking and attractive patio space, the property is well positioned to appeal to today's creative office space users. Vectra plans to invest significant money into the property to further upgrade the common areas and re-lease the property—potentially to another media or tech tenant.

PHOENIX, AZ—Gateway Mini-Storage, located at 5750 S. Power Road, in Gilbert, Ariz., recently traded hands between Circle G Property Development and CubeSmart LP for $14 million, a price of $150.77 per square foot based on existing net rentable square footage. NAI Horizon SVP Denise Nunez marketed the property on behalf of the seller. Nunez also secured the buyer, a national self-storage real estate investment trust. The price is the third-highest recorded for a single Arizona self-storage property.

RANCHO SANTA MARGARITA, CA—Institutional Property Advisors Capital Markets has arranged $19.6 million in debt on behalf of an unnamed borrower for the acquisition of Buena Vida at Town Center, a 115-unit, 55-plus age-restricted multifamily property in Rancho Santa Margarita, California. The loan was structured at a fixed rate of 3.25% interest with the first three years interest-only, then after converting to a 30 year amortization. The term of the loan is 15-years with a 67% loan-to-value.

SAN DIEGO—Hanalei Associates LLC, with Multi-Ventures Inc. as managing member sold the 419-room Crowne Plaza Hanalei for an undisclosed price to a private client of Brighton Management. Located in Mission Valley at 2270 Hotel Circle North in San Diego, the hotel is situated on nearly ten acres of prime San Diego real estate. The iconic Mission Valley landmark will continue under the Crowne Plaza flag with significant renovations and upgrades planned for the property. The 419-room, full-service Hanalei is strategically located along Interstate-8 and Mission Valley's Hotel Circle with easy access and proximity to the world-famous San Diego Zoo, SeaWorld, Old Town, Downtown/Gaslamp Quarter and San Diego beaches. CBRE Hotels' Bob Kaplan and Rod Apodaca, senior vice presidents in Newport Beach, represented the seller in this transaction. Brighton will manage the property.

LOS ANGELES—Rexford Industrial Realty has acquired a two-building industrial project for approximately $24.4 million. Located at 12320 4^th Street in Rancho Cucamonga, the property has two distribution buildings totaling 284,676 square feet on 16.5 acres and is currently 100% leased on an absolute triple net basis.  The tenant is a national manufacturer and distributor of commercial-use plastic bags. The buildings provide 26-foot to 28-foot ceiling clearance ESFR fire sprinkler systems, and are in close proximity to major freeways, offering a compelling value proposition for infill distribution. Rexford purchased the property with funds from the disposition of two industrial properties for a total of approximately $19.0 million.

LAS VEGAS—DK Loft 5 LLC has sold the Loft 5, a 241-unit luxury multifamily asset in Las Vegas to Steppe Bros for $51.5 million. Loft 5 is a luxury community featuring four resort-style pools and hot tubs, outdoor fireplaces and grills, a fitness center and steam room and a club lounge. In-unit amenities include12- or 20-foot ceilings, natural stone countertops, designer cabinets, bamboo hardwood flooring, washer and dryer, kitchen islands with a gas range, and built-in Sub-Zero refrigerators. All units also include private balconies or terraces. JLL EVP John Cunningham and SVP Charles Steele led the JLL team on the deal.

BUILDING BLOCKS
VICTORVILLE, CA—Stirling Development has broken ground on Distribution Centre 18, a 370,023-square-foot industrial facility in Victorville. The property is located at Southern California Logistics Airport, an 8,500-acre multimodal freight transportation hub that includes a 2,500-acre commercial and industrial complex entitled for 60 million square feet of development. While construction has just begun, the facility has already been 42% pre-leased to Plastipak Packaging Inc. Plastipak will use the facility for warehousing needs and plans to expand its presence within SCLA once the property is completed in summer 2017. Plastipak currently occupies more than 312,000-square feet within SCLA including two small warehouse locations and one 296,490-square-foot manufacturing facility. Jay Dick of CBRE is handling leasing on behalf of Stirling Development.