A private family firm has received $62 million in loans arranged by Bellwether Enterprise Real Estate Capital to acquire two industrial properties in Los Angeles’ Arts District.
“Both loans were for refinancing previous acquisitions,” Kevin Mulvaney, Bellwether Enterprise’s senior vice president in Los Angeles, told Commercial Property Executive. “Both projects were adaptive reuse going from industrial to creative office.”
Morgan Stanley provided the 10-year, $40 million refinancing loan for 2301 E. Seventh St., a 257,681-square-foot office complex consisting of five buildings. The owner acquired the property in 2003 and transformed what was then an abandoned manufacturing complex into a gated office complex in three years.
“It’s a unique building and right next to 101 Highway, so it has great access and has parking at a 2 to 1 ratio, which is like gold in Los Angeles,” Mulvaney said. “There is now iron fencing all around it, adding to the charm and also the safety.”
Tenants in the building include those from the nearby Fashion District and others involved in the technology, import/exports and entertainment sectors.
A focus on creative office
The property at 1700 Santa Fe Ave. was acquired in 2017 and originally served as a warehouse for a gas company and a tire company, until it was revamped into a 175,000-square-foot creative office property last year. Today it boasts a large floorplate and high-ceilings. There’s also space adjacent to the building that is being earmarked for a future restaurant and a parking lot.
Silverpeak Argentic provided a $22 million bridge loan with a floating rate over LIBOR for a three-year term, with two one-year extension options. The owner is using the money to refinance a high-interest existing loan.
“He wanted to replace the bridge financing he had, which was great at the time, but not good now as the market changes, to something a bit more palatable, and we were able to do that,” Mulvaney said.
The area is south and east of downtown Los Angeles and according to Mulvaney, the Arts District is in great demand for commercial real estate in 2019.
“The surrounding neighborhood to both these buildings—they are about a mile apart—were abandoned, but my client specializes in adaptive reuses and very early on recognized there was no land left to develop in Los Angeles and as time went on, the industry would revive the area,” he said. “A lot of these old, abandoned buildings are being sold for great prices.”
That has happened and the neighborhood is considered hip and up and coming to millennials.
In 2018, Bellwether was named a Gold winner for Best Corporate Strategy in CPE’s Distinguished Achievement Awards. The company expected to finish 2019 with approximately $7.3 billion in production and $22 billion in servicing.
Images courtesy of Bellwether Enterprise Real Estate Capital