Decron Properties Corp. owns about 50 commercial and residential developments, mostly in Los Angeles County, totaling some 6 million square feet.
So why did the Miracle Mile real estate investment and development firm just make a $17 million bridge loan for a Miracle Mile condominium property July 30?
It’s simply good business.
Decron has the cash and others in the real industry don’t. That means some easy money, assuming the underwriting is strong.
“It’s not a shift in philosophy. The shift is in taking advantage of our abilities and know-how both as a real estate investment company and also as real estate operators,” said firm President David Nagel.
Decron plans to specialize in lending on properties with which it has familiarity, such as apartment and condominium buildings and office properties. Accordingly, the firm’s first loan falls squarely in that comfort zone.
The $17 million loan to West L.A.’s Canfield Development Inc. allowed that company to pay off a construction loan on its newly completed 52-unit loft building at 600 S. Ridgeley Drive, called Museo Lofts.
Steve Erdman, Canfield’s president, said that his firm had searched for a bridge loan for “a couple of months,” because its construction loan with California Bank & Trust was coming due. The construction loan was originally with Vineyard Bank, which failed in July 2009, and was later purchased by California Bank & Trust.
“There were other people that gave us similar offers,” Erdman said. “I think that we were looking at someone we felt could deliver. It took us a while to negotiate a term sheet but once we did, everything moved ahead.”
Nagel declined to discuss the interest rate his company is charging for the loan or the amount of cash it has on hand to make loans.
“Our goal is to lend money at interest rates that are profitable for us and ultimately (to) be paid off timely,” he said.
Meanwhile, Erdman said that the $33 million development, which opened in June, is 75 percent sold. Units at the four-story building are priced from the mid-$400,000s to the high $600,000s.
“The pace of sales is such that the project will be sold by the end of the year,” he said.
Westwood Sale
A 24-unit upscale apartment building at 1371 S. Beverly Glen Blvd. in Westwood has changed hands for $6.35 million. The all-cash transaction closed July 30. Buyer Xenon Investment Corp., a Westwood multifamily investment group, purchased the 33,714-square-foot building from 1371 Beverly Glen LP, the entity of Beverly Hills real estate investors.
Hamid Soroudi, the Charles Dunn Co. broker who represented both parties, said that the building had three vacant units at the time of close. Built in 1961, the property is subject to the city of L.A.’s rent control ordinance.
The inability to sharply raise rents shouldn’t be a problem, since the buyer’s goal wasn’t a short-term gain, Soroudi said.
“The goal of the new owner is to buy this type of well-located properties and hold them for a long period of time,” he said. “Their goal is not to immediately reposition the property.”
The sale of the all-two-bedroom building breaks down to $264,583 per unit. That appears to be a high price but the units are large, ranging from about 1,150 to 1,400 square feet. The deal breaks down to $188 per square foot. Rents range from about $1,570 to $2,100 per month.
“It’s pretty much a market rate (deal),” Soroudi said. “But with what’s happening today, what is market?”
Ramin Gheitanchi of Charles Dunn Co. also represented the seller.
The seller could not be reached for comment.
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
