Meruelo Maddux Closes on $84M to Finish L.A. Residential Tower
- Aug 05, 2008
Unlike a bevy of construction projects across the country, development of the upscale 214-residence apartment high-rise at 717 W. Ninth St. in Los Angeles will not fall victim to the credit crunch, as Meruelo Maddux Properties Inc. has just closed on an $84 million construction loan. The 35-story structure, located across from the Staples Center sports arena and the $2.5 billion L.A. Live mixed-use project, is part of a long list of developments that are contributing to the multi-billion remake of downtown Los Angeles. Meruelo Maddux was able to secure financing for 717 W. Ninth from an affiliate of Los Angeles-based investment advisor and money management firm Canyon Capital Realty Advisors L.L.C., which provided a loan with an initial term of 18 months, plus the option for five six-month extensions. The first 18-month period of the loan carries a 1.5 percent commitment fee, and a 12 percent fixed interest rate is attached through the loan’s maturity. Meruelo Maddux had experienced a few hiccups with 717 W. Ninth’s progress, but the new financing has paved the way for smooth sailing. “There were some challenges but work had not stopped–it slowed but it did not stop,” a spokesperson for Meruelo Maddux told CPN today. While the majority of the loan will be utilized for continued construction activities, remaining proceeds will be used to fund an interest payment reserve and a real estate tax and insurance reserve.Funes Architecture is behind the design of the building, which occupies two-thirds of an acre. In addition to the apartment units, 717 W. Ninth will feature a restaurant, as well as 6,800 square feet of ground-level retail, 322 parking stalls, a fitness facility and a library. The property has also been designed to meet standards for LEED Silver certification. Apartments are scheduled to come online in September 2009, and upon completion, 717 W. Ninth will be one of downtown’s tallest residential buildings. With a bevy of new projects delivering, the vacancy rate in the downtown area has risen a tad, but it is still not expected to exceed a relatively low 5.2 percent this year, according to a report by real estate investment services firm Marcus & Millichap. Furthermore, swelling asking rents, which are expected to increase 4 percent this year, will continue to offset minor growth in the average vacancy rate. “The demand for upscale apartments downtown is very strong,” the spokesperson said. “Downtown is really evolving into an area that can accommodate residential. It’s been tried before, the idea of having downtown residential development, but at the end of the day downtown essentially closed down. But now there’s a rebirth. There are restaurants, nightlife and ancillary services people are accustomed to having.” Headquartered in Los Angeles, Meruelo Maddux is a full-service real estate concern that owns and develops commercial and residential projects in downtown Los Angeles, and in other urban centers in California that are presently experiencing demographic or economic changes.