Big ‘Bloc’ Project in L.A. Reels in Big Financing
- Apr 08, 2016
By Barbra Murray, Contributing Editor
Los Angeles—Lenders don’t just dole out a quarter-billion-dollars every day, which is why a recent financing package for The Bloc in downtown Los Angeles is such a big deal. With the assistance of commercial real estate and capital markets services provider HFF, the ownership team behind the 1.8 million-square-foot mixed-use redevelopment project—The Ratkovich Co., National Real Estate Advisors and Blue Vista Capital—has gotten its hands on a $225 million loan.
HFF secured the permanent loan through an institutional balance sheet lender that found a lot to love at The Bloc. The 1970s-era property, known as Macy’s Plaza when Ratkovich and partners acquired it for $241 million in 2013, features a 33-story formerly Class B office property that will debut as a cutting-edge, 700,000-square-foot creative-leaning workplace. There’s also a Sheraton Hotel that has been renovated and expanded to include 496 rooms at a cost of $75 million. The Bloc, which will be transformed from enclosed mall to an open-air destination, will also feature more than 150,000 square feet of retail and restaurant offerings, and that doesn’t include the 250,000-square-foot Macy’s department store. And there was even more to turn lenders’ attention to the $180 million redevelopment endeavor.
“There was robust interest from a number of financing sources with a variety capital structures. Many lenders were able to get comfortable with the financing request due to the property’s strong leasing velocity, direct access to the metro, and reciprocal mixed-use amenities,” John Crump, director with HFF, told Commercial Property Executive. Crump and colleagues Paul Brindley and Matt Stewart advised Ratkovich et al. The financing is being utilized to replace the remaining $121.6 million balance on a CMBS loan the partners had assumed from the previous owner, as well as for the completion of the redevelopment funding of leasing costs.
The leasing activity that gave lenders that warm and fuzzy feeling includes agreements with a diverse group of tenants including Nordstromrack.com | HauteLook, which will relocate its headquarters to a 44,000-square-foot space in the office building. Other commitments have come from architecture and engineering firm DLR Group, architecture and urban design firm Studio One Eleven and commercial real estate services firm Newmark Grubb Knight Frank.
The Bloc is attracting a lot of attention for a lot of reasons. The LEED-certified development will also hold the distinction of being the world’s first full city block designated as a Delos WELL Building Project.
“It’s a truly transformational project that will leave its mark on downtown for years to come,” Crump said.