Buyer Finds Unique Opportunity in 53-Unit Deal

[IMGCAP(1)] Los Angeles

Franklin Pointe Associates LLC has sold the Franklin Pointe Apartments in Hollywood for $7.4 million. Located at 1825 N. Cherokee Ave., the three-story 53-unit apartment complex lies at the heart of Hollywood’s renaissance. Darin Beebower of Madison Partners was the listing broker for the property, representing both the buyer, 1825 Partners LP, an L.A.-based real estate investment company, and the seller. The property was substantially renovated by the previous owner and the new owner plans minimal cosmetic upgrades to the well occupied building. The complex has a unit mix comprised of eight studio units, 29 one bedroom/one bath units, eight one bedroom/two bath/den units and eight two bedroom/two bath units. The property consists of 42,945 square feet and is situated on a 23,479-square-foot lot. Originally constructed in 1963, the property was renovated in 2007-2008. “The buyer recognized the unique opportunity to acquire a renovated asset in an excellent location at a basis that should minimize their downside exposure while allowing for great cash flow and significant potential upside as the economy and local rental market recover,” says Beebower. According to Beebower, the property received numerous offers from local families and private investment groups attracted to the excellent condition, outstanding location and optimistic belief in the long-term strength of the sub-market. Brian Eisendrath of CBRE Capital Markets secured the borrower’s new seven-year debt at a fixed rate of 5.45% via Freddie Mac’s DUS program.

Dominion Healthcare Financial Corp., a subsidiary of Dominion Corp., a national commercial real estate banking firm headquartered in Los Angeles, closed a complicated $14.125 million loan on a portfolio of five skilled nursing facilities in California. Dominion Corp. VP Loren Thall structured a capital stack that consists of both senior and subordinated debt, of which $10.125 million is secured by the real estate. The remaining $4 million is secured by the accounts receivables of the skilled nursing homes. The five-year loan amortizes over 25 years and is based on a debt coverage ratio of 1.35 at an LTV below 70%. “This was the second time we have worked with this borrower,” Thall pointed out. “This helped when coordinating the various and complicated ownership structures and other components of the transaction.” He says the financing provided significant challenges because the debt needed to be structured to allow for some of the equity partners’ ownership interests to be phased out, while also completing a lease-purchase option and providing working capital for the the borrower, an owner/operator of healthcare properties. Dominion eliminated the prepayment penalty of 1% after year one of the five-year loan term. The properties totaling 235 beds, are located in San Francisco, Oakland, San Leandro and Culver City. All of the properties were originally constructed in the 1960s and 1970s and have since been renovated. The facilities offer skilled care as well as acute care services and are also Medicaid and/or Medicare providers.