Brentwood Buyer Scoops Up 99 Van Nuys Condos

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Ninety-nine condos in Van Nuys have been sold to a Brentwood-based real estate investor in yet another example of a bank moving a foreclosed asset off its books.

Such deals – called REO transactions – have picked up, with banks looking to sell off properties they have come to own during the recession.

The property, called Sonterra Homes, was sold by Inland Bank of Oak Brook, Ill., to Cohen & Associates LLC in an Oct. 23 transaction. Cohen & Associates purchased the 99 condos at the 161-unit property in an all-cash deal valued at $6.15 million. The project, at 15425 Sherman Way, includes a swimming pool, and spa and fitness center, among other amenities.

The former unnamed owner of the property bought the project in November 2005 and converted its apartments into condos. He sold 62 of the units – mostly in 2007, before the market cratered. However, sales slowed after the downturn and Inland Bank foreclosed in June 2009.

Broker Ron Harris of Marcus & Millichap, who handled both sides of the deal, said that 41 of 99 units were occupied by renters at the close of escrow.

Gidi Cohen, owner of Cohen and Associates, said that he will rent all the units until the condo market turns around, which he believes could take as long as five years.

He said that the deal makes sense because the rental income makes the deal cash-flow positive.

The deal breaks down to $62,121 per unit.

“I think I got an above-average deal,” Cohen said.

Inland Bank was not available for comment.

Thomas Explains

Jim Thomas gave the Business Journal a behind-the-scenes look at why his company, Thomas Properties Group Inc., canceled a public offering of 22 million shares of its stock.

The downtown L.A.-based commercial real estate investor and developer’s short statement Nov. 4 announcing the postponement of the offering only told part of the story.

Thomas, chief executive of his namesake company, described two topsy-turvy days of trading that preceded the offering, scheduled for Nov. 3, as the reason behind the decision to pull the plug.

The company would have used the money from the offering, which would have doubled the number of outstanding shares, for expansion plans and to pay down debts.

Thomas Properties had announced the plan Nov. 2 and the stock purchases were scheduled for close of the market Nov. 3. The stock closed at $3.05 on Nov. 2, down 9 percent from a week earlier.

Thomas said that word had gotten out in late October that the company planned the offering and the stock price then dropped over the course of the week before the offering. Thomas grew concerned because the drop meant the offering, which would have been set at or below the closing price of shares on the day of the sale, might bring in less than planned.

On Nov. 3, the day the sale was scheduled, the stock closed at $2.16 – a 29 percent decline from the previous day. The sudden drop made it unrealistic to sell shares, Thomas said.

“Our stock just took a dramatic decline,” he said.

Thomas speculated on a few reasons why the drop-off occurred. He believes that many of the large buyers in the marketplace held off making purchases during the day of Nov. 3 because they were preparing for big purchases in the after-hours public offering. With more sellers than buyers, the stock sank.

He said it is also possible that investors saw the offering as potentially diluting the stock because it doubled the number of the company’s shares.

The stock recovered somewhat in the days after the cancellation. It closed at $2.34 on Nov. 5.

Thomas said the company is still considering another similar offering.

Smokin’ Deal

Grand Havana Enterprises, the Beverly Hills-based company that operates the Grand Havana Room, a members-only cigar club, signed a 10-year renewal for its Beverly Hills club.

The Oct. 13 deal, which is valued at $5 million, will commence in the first quarter 2010. The swank 11,000-square-foot private club counts Gov. Arnold Schwarzenegger, and actors Mel Gibson and Robert De Niro among its high-profile clients. The 301 N. Canon Drive club includes a mammoth glass-walled humidor with 350 private lockers for members’ cigar collections.

Bob Safai of Madison Partners, who represented the club in the deal with landlord Douglas Emmett, a Santa Monica-based real estate investment trust, said that the club didn’t consider leaving the space because of its prime location and 15-year history in the community.

“It’s such a great amenity for the Beverly Hills Golden Triangle market,” said Safai. “It’s a unique place.”

While the value of the lease was not disclosed, Safai, who is a member of the club, termed it a market-rate deal.

Grand Havana Enterprises, which is owned by an unidentified Beverly Hills family, did not return e-mails seeking comment.

Douglas Emmett did not return calls seeking comment.

Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.

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