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Friday, Mar 31, 2023

Residential-Retail Project Sets Up Beachhead

Miracle Mile real estate development and investment firm Decron Properties Corp. broke ground this month on a $67 million mixed-use apartment project in Westchester.

The 262,714-square-foot development, at Manchester Avenue and Rayford Drive, will include 260 apartments, 5,000 square feet of space for ground-floor shops and a 515-space underground garage.

It is the second and final phase of Playa Del Oro, a 13-acre master development that when completed will total 665 apartments and 110,000 square feet of retail space, including a Ralphs FreshFare, L.A. Fitness and Coffee Bean & Tea Leaf. It is expected to be finished by the end of next year.

The apartment project will include a pool and spa, fitness center, cinema room, dog park, a café and landscaped courtyard with a fountain.

Apartments will range from studios to three-bedrooms units, and some will include upper-floor lofts. All units will be outfitted with granite or quartz countertops, stainless steel appliances, washers and dryers, and patios or balconies.

Rents will start at $1,900 for studios and rise to $3,975 for two-bedroom-plus-loft units.

Decron secured a $67 million construction loan this month from Wells Fargo & Co. with the help of Meridian Capital Group.

“We’re thrilled to close the loan on Playa Del Oro West and commence with the completion of our vision,” David J. Nagel, Decron’s president, said in a statement. “Our plan for this site was always to create the highest and best use for this dynamic piece of property as the gateway to Playa del Rey.”

The site was first purchased in 2002 by a Decron affiliate. At the time, it was occupied by a 775-room Furama hotel, previously the Airport Marina Hotel.

The first phase of the project was completed in 2009 and included 405 apartments with 27,000 square feet of retail space for a health club and four restaurants. It also included a 250-room Custom Hotel, which Decron has since sold.

Decron owns and manages about 5,000 residential units and operates a portfolio of 3 million square feet of commercial office and retail space throughout California.

Kilroy Capital

West L.A. real estate investment trust Kilroy Realty Corp. raised $300 million through a bond offering last week.

It will use the money to acquire a Seattle office complex, fund its development pipeline and pay down some debt, according to Chief Financial Officer Tyler Rose.

The $170 million Seattle purchase, a two-building 320,399-square-foot Class A property in the South Lake Union area of downtown, closed this month. Group Health Cooperative and Microsoft Corp. are among the tenants of the fully leased property.

On the development front, Kilroy is in different stages of development on four projects totaling about $800 million in the San Francisco Bay Area. The projects include a 587,000-square-foot office complex for LinkedIn Corp. in Sunnyvale.

The company’s debt, exchangeable senior notes and line of credit totaled $1.84 billion in the third quarter ended Sept. 30, according to its most recent 10-Q filing. It reported funds from operations, a REIT metric that removes the profit-reducing effect of depreciation and amortization, of $43.1 million in the third quarter, up 27 percent from the year-ago quarter.

The newly issued bond note pays semi-annual interest at 3.8 percent and matures in January 2023.

Public companies that issue bonds to raise capital instead of offering new shares typically do so to avoid diluting the value of common stock. Rose said that the low interest rate made the bond issuance attractive.

“We were happy with the coupon of the transaction,” he said.

Apartment Sale

A 75-unit Hollywood apartment complex has traded hands for $16 million.

Local investor Jeffrey Nemoy bought the property at 7513 Fountain Ave. from L.A.’s Sunbelt Foundation Ltd., which had owned it for 30 years.

The property is only minutes from the popular Hollywood & Highland Center shopping and entertainment complex. It was recently refurbished with a new roof, common barbecue area and a saltwater swimming pool.

It was the third highest sale price of a multifamily property in the Hollywood submarket last year, according to CoStar Group Inc.

CBRE Group Inc. broker Laurie Lustig-Bower, who represented the seller in the November deal, said the property had many interested buyers.

“The location, number of units and recent renovations attracted many strong offers,” she said.

Kamran Paydar, also of CBRE, represented the seller. Stephen Saltzman at Keller Williams Realty represented the buyer.

Staff reporter Jacquelyn Ryan can be reached at jryan@labusinessjournal.com or (323) 549-5225, ext. 228.

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