Prime Gets $947M Refi for California's Largest Apartment Complex

Prime Residential has reached a deal with Freddie Mac to retire the existing debt on California’s largest apartment complex—Park La Brea, a sprawling Los Angeles campus that encompasses 18 multifamily towers and 175 garden-apartment-style buildings—and replace it with a $947M loan.

According to Newmark, which brokered the refi, the new 10-year, fixed-rate deal constitutes an “historic” financial package that will enable San Francisco-based Prime to add more affordable housing to the 4,249 existing units at the 144-acre complex, located on Wilshire Boulevard.

“This was [an] historic financing that contains a variety of custom features, including the flexibility to construct a significant number of accessory dwelling units (ADUs) on the property, which will contribute towards addressing the state’s housing and affordability crisis” Newmark Executive Vice Chairman Mitch Clarfield said, in a statement.

California amended its state housing laws last year to permit the widespread deployment of ADUs—also known as granny flats—to address an affordable housing state of emergency that has been declared by the state.

Granny flats, so named for the small units that homeowners sometimes build over the garage to give Granny a place of her own—okay, this is the last time we’ll point this out: if it’s Granny’s house she can park the kids there when they move back in—have been embraced by the Golden State as a quick way to increase housing density.

Lender Freddie Mac expects to securitize the new loan for Park La Brea through K-Deal, a CMBS package of multifamily properties, according to Newmark’s release.

Steve Lineberger, Freddie Mac’s VP of multifamily production and sales, said the Park La Brea financing package will be a template for similar transactions across the US that will be aimed at spurring an increase in affordable housing.

“We’re pleased to continue to help support workforce housing via this vital multifamily community that has been home to so many since the 1940s,” Lineberger said, in a statement. We look forward to continuing to support liquidity, stability and affordability [in] the multifamily market through these types of transactions across the country.”

More than 10,000 people live in rent-controlled apartments at Park La Brea, which was built by MetLife built during World War II. The community resembles a small city with its own 24-hour security patrol, movie theater and dry cleaner. Prime bought the housing complex in from MetLife in 1995.

In San Mateo County, located on the Peninsula between San Francisco and San Jose, a civil grand jury issued a report this month claiming several cities in the county are relying on ADUs to avoid mandates to build new multifamily affordable housing units without adequate enforcement to ensure low-income families will be occupying these units.

California amended its Housing Element Law to allow communities to count ADUs as affordable housing in their plans to build affordable housing that meets state-mandated goals.

The grand jury’s report said that communities on the San Francisco Peninsula, including Atherton, Hillsborough, Portala Valley and Woodside submitted Housing Element plans to the state that meet as much as 80% of their affordable housing goals with ADUs.