The Flat, an apartment building just west of the Pasadena (110) Freeway in downtown Los Angeles, has been sold by the lender that took over the property after the developer went bankrupt.
Chinatrust Bank, a Torrance-based consumer and business bank, sold the 750 S. Garland Ave. property to multifamily investor SA Properties Holdings LLC for more than $20 million in an all-cash transaction. The exact sale price is not known, but the building had been listed for $27 million.
The 206-unit project was developed by 750 Garland LLC a group headed by developer Bret Mosher and opened in 2006. The bank initially tried to sell the note on the property this year, before the developer filed for Chapter 11 bankruptcy protection in the spring. After the developer could not restructure, the bank foreclosed and took over the property in early September and sold it. The deal closed at the end of September.
The six-story, 82,700-square-foot project was 93 percent leased at the time of the sale and is largely home to students of nearby schools USC, the Fashion Institute of Design & Merchandising and Loyola Law School. The property includes an attached four-story parking building and houses Blue Velvet, a trendy restaurant. It was originally built as a Holiday Inn in 1968.
"The borrower, even though he lost the property, did a wonderful job in the renovation," said Phillip Sample, a senior vice president at Grubb & Ellis Co., who represented the seller. "It is very unique. There are very few student housing projects in the downtown market."
Sample believes that the sale could be a harbinger of banks unloading more foreclosed properties. So far, they haven't done so, at least partially because of a desire to not sell at the bottom of the market.
The bank, SA Properties and developer 750 Garland all did not return calls seeking comment.
Chris Cooney, Chris Caras and Sandi Mann of Grubb & Ellis also represented the seller.
Two weeks ago, NBC Universal Inc. reaffirmed a commitment to a $3 billion plan to further develop its 391-acre Universal City property, home to Universal Studios.
The studio said it had refined the plan to include new roads and a shuttle bus system, and make the proposed residential housing more pedestrian friendly.
But the news came just as talk heated up that NBC Universal parent General Electric Co. might unload its broadcast and entertainment unit, prompting speculation on the development's fate.
The 25-year plan, first announced in 2006, would include 308,000 square feet of additional studios, as well as expansions of the Universal Studios park and City Walk mall. Proposed for an undeveloped area of the back lot are 2,900 apartments and condos.
Even though studio chief Ron Meyer participated in the recent publicity campaign for the project, some Hollywood insiders wonder if any buyer of NBC Universal would be as interested in the project especially its residential development.
However, Bill Boyd, a senior managing director at brokerage Charles Dunn Co., said that the back-lot property represents such a prime development opportunity that a studio buyer could just spin off the residential development to another company.
"If it's done consistent with its current plan, it wouldn't matter who develops it," said Boyd, who handled the leasing of NBC Universal office building 10 Universal City Plaza when it opened in 1984.
NBC Universal declined to comment.
CB Richard Ellis Group Inc. has experienced a bit of a turn-around. The leading commercial brokerage, zonked by the real estate downturn that sharply cut fee revenue, has made multiple moves that have pleased investors.
Aside from trimming staff and cutting compensation, the West L.A. brokerage this year refinanced $450 million of its debt and worked with lenders to soften terms on other outstanding debt. Also, private equity group Paulson & Co. invested $100 million in the brokerage.
Now, helped along by the market rebound and a sense the commercial real estate market may have hit bottom, the company's stock has rebounded. Shares closed Oct. 7 at $11.35, up 163 percent since the beginning of the year.
Nick Pirsos of Macquarie Equities Research said in a recent research note that the company should see growth in its operating margins after cutting $475 million in base compensation and the brokerage industry rebounds.
"Our basis for an improved commercial real estate outlook reflects a favorable year-over-year comparison, following two years of dearth of activity," wrote Pirsos, who rates the company "outperform."
As of Oct. 8, three of nine analysts who cover the company rated it a "buy," while the rest rated it a "hold," according to Bloomberg News.
Staff reporter Daniel Miller can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 263.
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