Dealmaker: Quantum Capital Partners Secures $54M
Michael Tucker firstname.lastname@example.org
Quantum Capital Partners, Beverly Hills, Calif., arranged $54 million to refinance four Los Angeles properties.
The firm secured $38 million in combined short- and long-term debt to refinance a three-property commercial real estate portfolio in downtown Los Angeles for local real estate investment firm Robhana Group.
Quantom secured financing through the newly completed 60,000-square-foot Downtown West Medical facility and urgent care clinic operated by Healthcare Partners, an adjacent and recently renovated 50,000-square-foot multi-tenant office building and a new nine-story parking structure serving both buildings.
The three properties occupy a single two-acre lot at 1120 and 1122 Washington Boulevard in the Pico Union/University Park submarket. To obtain the best financing possible, Quantum recommended Robhana Group split the financing into two separate loans; long-term debt secured by the medical facility and shorter-term debt for the office building and parking structure.
Quantum Managing Director Jonathan Hakakha called dividing the site into two parcels a "significant undertaking." He led the financing assignment with Quantum Managing Director Mike Yim.
"While the medical facility is fully leased to a blue-chip tenant over a long-term lease, the recently renovated multi-tenant office building will need some time to bring expiring rents up to market and allow parking revenue to mature," Hakakha said. "It didn't make sense to finance all three properties with one loan."
Once the office and parking assets are performing at full potential the sponsor can refinance into a new permanent loan to maximize proceeds, Hakakha noted.
After assisting the client to process the lot line adjustment with the City of Los Angeles, Quantum secured a $28 million 10-year non-recourse commercial mortgage-backed securities loan originated by a New York-based private lender to take out the medical office building's construction financing and a separate three-year fixed-rate loan priced at 150 over the three-year swaps from a money center bank to refinance the multi-tenant building and parking structure. Both loans, which closed simultaneously, were structured to return equity back to the borrower.
Quantum also secured a $16 million cash-out loan for South Park Group affiliate Duns Capital, Los Angeles. The new permanent debt refinanced an existing floating-rate loan on a recently converted seven-story mixed-use property in downtown Los Angeles' Fashion District.
The Grether & Grether building at 732 South Los Angeles Street was constructed in 1924 as a dry goods manufacturing building. Duns Capital acquired the property in 2013 and converted it to residential use under the city's Adaptive Reuse Ordinance.
In 2014, the City of Los Angeles declared the building a Historic-Cultural Landmark, which allowed the sponsor to file for reduced property tax assessments under the Mills Act, an incentive program that encourages restoration and preservation of qualified historic buildings in exchange for tax credits. Duns later sold the tax credits to an investor that created a complex master lease structure.
Hakakha said few lenders were comfortable with the complex structure and the protection required by the tax credit investor under the master lease. "We were able to demonstrate the sponsor's expertise, high-quality operations and successful track record with this structure and identify a regional bank willing to take the time to understand the structure and provide 10-year non-recourse financing."
Completed in 2017, the Grether & Grether building features 72 loft-style apartments with 14,700 square feet of retail and office space on the ground floor and mezzanine levels.