South Park Lofts, a tony 49-unit apartment complex in the downtown L.A. neighborhood, went into foreclosure last month after its owner was unable to refinance and failed to sell the property.
San Francisco property manager and developer Martin Building Co. bought the eight-story building, at 816-818 S. Grand Ave., in 2002 and spent more than $10 million upgrading and converting the commercial space into lofts.
But when its five-year, $15.2 million loan came due earlier this year, underwriting standards had changed and the owner wasn’t able to refinance the loan or come up with the $5 million in equity required by the lender for a $10 million loan.
The company tried selling the building earlier this summer, listing it for a steep $336,700 per unit, while comparable nearby lofts, like those at Santee Court, have sold for an average of $265,430 per unit over the past 12 months.
Lender CWCapital Asset Management of Bethesda, Md., foreclosed on the property Aug. 12.
“The problem with a lot of these properties is they were purchased at the peak of the market or just prior to it and were developed at a time when people thought that rents were going to continue to rise,” said Albert Shilton, senior managing director in Charles Dunn Co.’s Century City office, who brokers multifamily deals downtown.
Now registered as a historic landmark, the loft building was built in 1924 as one of L.A.’s first parking garages. The building was converted to office space in the 1950s.
Today, it includes a rooftop garden, grilling area, hot tub and fitness center. The units range from 680-square-foot studios to 1,500-square-foot three-bedroom, two-bathroom units.
Martin Building and CWCapital did not return calls.
Grand Slam
A 45-year-old Denny’s in Santa Monica may be set for closure.
The nearly 1-acre property, on the northwest corner of Lincoln and Colorado boulevards, is up for sale as a development opportunity with a buyer likely to be chosen by month’s end.
The property has been family owned for the last 50 years. But Denny’s lease is up next year and the family has decided to sell rather than extend the lease.
“From a value standpoint, it’s a minimum 300 percent greater in value as (land for development) than leaving it is as a restaurant,” said Alex Kozakov, senior associate in the downtown L.A. office of Encino brokerage Marcus & Millichap, who represents the property owners with colleague Patrick Wade.
The property, within blocks of the Third Street Promenade, is zoned for mixed use of up to 100,000 square feet, such as apartments with ground-floor retail. Such prime, developable real estate is rarely available in Santa Monica, and the property received 18 offers within 30 days of being put on the market in late July.
The brokers declined to identify any developers who may have put offers on the property and what price they expect to fetch.
Final offers were due on the property last Friday.
Hitting the Gas
Mercedes-Benz finally has an office for its first driving school in the United States.
The German car company inked a 10-year deal for 4,300 square feet at 8231 W. Third St., at the corner of North Harper Avenue near the Beverly Center, last month.
The driving academy will occupy part of the first floor of a new 10,000-square-foot retail building that developer Third Street Cityview LLC completed last year.
The value of the deal was not disclosed, but sources said Mercedes is paying a monthly rental rate nearly 40 percent higher than the neighborhood’s rough average of $3 or $4 per square foot. The building features concrete floors, tall ceilings and has the most private parking on the block.
“The developer spent the money, built the best building they could build, and the retailers were willing to step up and pay for the best,” said Matthew May, president of Sherman Oaks retail brokerage May Realty Advisors. He and colleague Gabe Kadosh along with Coldwell Banker broker Anthony Palermo represented both sides of the deal.
Mercedes plans to open the driving school, aimed at teenagers, next month.
Staff reporter Jacquelyn Ryan can be reached at [email protected] or (323) 549-5225, ext. 228.
