A common complaint by developers amid the credit crunch has been that even good projects are having difficulty getting financing by big banks and other established lenders.
Now, a Los Angeles startup is trying to help fill that void in the California marketplace.
Wilshire Finance Partners Inc. began making commercial real estate loans last month in the $500,000 to $3 million range, targeting everything from strip centers to small office building, and refinancing existing loans.
The lending operation was co-founded by Kevin DeMeritt, president of Lear Financial Inc., a Santa Monica-based precious metals company, and Thomas OBryon, who assumed the post of chief executive.
"Banks aren't lending on good properties," said DeMeritt. "Maybe a borrower's credit rating isn't up to the bank's snuff, but when you put everything together it is a perfectly fine loan that would have made sense nine months ago."
The company has already funded three loans, including the refinance of a strip mall in Venice. It also refinanced a Palm Desert apartment complex, which will be remodeled with funds allocated from the new loan.
Capital for the startup came from the co-founders, who each contributed about $1 million, in addition to more than 30 other people who are making unspecified investments.
The company believes it has advantages in the marketplace aside from seizing on what it believes are "safe" investments that big lenders are passing on.
OBryon, with the assistance of software writers, developed a proprietary computer modeling program that DeMeritt said helps the company identify good loan prospects. The program evaluates a property's appraisal value, location, tenant strength, condition and absorption rate, among other parameters.
In addition, the company intends to finance projects that will allow it to recover its capital even if the developer or owner gets into financial trouble, he said.
Ta Chen International Inc., a Taiwanese stainless-steel manufacturer and distributor with U.S. headquarters in Long Beach, has signed a seven-year lease at Golden Springs Business Center in Santa Fe Springs.
The lease for the 92,348-square-foot industrial building at 12825 Carmenita Road is valued at $6 million. Since purchasing Canadian screw and socket manufacturer Brighton-Best earlier this year, Ta Chen needed more space in the local market, said Cameron Driscoll of Voit Commercial Brokerage.
As part of the deal, landlord Golden Springs Development Co. of Santa Fe Springs is building a 5,000-square-foot office building for Ta Chen, which should be completed next month. Ta Chen will move in when the build-out is complete.
The lease starts at 72 cents per square foot per month on a triple net basis. It escalates by 7.5 percent at the 31-month mark and again at the 61-month mark.
Driscoll, who represented Ta Chen, said that the lease is "at the top of the market" for the Mid-Cities region, but noted that Golden Springs is the highest-end project in the area. "There is very little in the Mid-Cities market that is Class A, big box."
The building made particular sense for Ta Chen because it has 6-inch-thick reinforced concrete floors, which the company needs because of the heavy steel products it handles.
Luke McDaniel of Voit also represented the tenant, while Clyde Stauff and Steve Calhoun of Colliers International represented the landlord in the Feb. 4 deal.
Investors Move West
Praedium Group LLC of New York opened its first California office in May at a Los Angeles building.
The national real estate investment firm, which has holdings in Los Angeles and statewide, is in the process of investing a $900 million private equity real estate fund.
The office at 9911 Pico Blvd., a 14-story West L.A. building, will be run by Robert Murray, head of the firm's West Coast division.
"It's a convenient location for us, close to the Westside, close to the San Diego (405) Freeway," said Murray, who plans to split time between Los Angeles and New York.
Praedium typically focuses on underperforming or undervalued real estate assets and has made over $7 billion in investments since its 1991 founding. The company owns an office building at 8075 W. 3rd St., near the Miracle Mile, and about 1,500 apartment units in California.
Murray said the firm is interested in investing in multifamily and office properties, and will try to take advantage of opportunities made available by the weakened credit markets.
Praedium declined to discuss its lease with 9911 Pico Blvd. landlord Cabi Developers LLC.
Staff reporter Daniel Miller can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 263.
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