Olive Hill Receives Creative Office Financing in LA
- Jul 27, 2017
Olive Hill Group has obtained $41 million in fixed-rate refinancing for its Courtyard at Culver Pointe, a Class A creative office campus at 200-300 Corporate Pointe in the Culver City submarket of Silicon Beach.
Los Angeles-based Olive Hill had acquired the property for $65.6 million in May 2016, subsequently rebranding it and launching a major redevelopment. The latter will include upgraded seating areas throughout the courtyard, food truck loading zones, a bocce ball court and a new on-site gym, among other amenities.
Since acquiring the property, Olive Hill added to its tenant roster Ipsos Insight, a global market research and consulting firm, and Omnia Media, a subsidiary of Blue Ant Media. Existing tenants included DataScience Inc., Paychex and Shiseido Cosmetics.
The financing was arranged through Newmark Realty Capital Inc., represented by Principal Andy Bratt and Vice President Amit Tyagi.
Successful, But Not Easily Refinanced
The property’s “prime location, strong occupancy, and quality tenant mix made this an attractive property to finance,” Tyagi said in a prepared statement. “The challenge, however, was identifying a lender that understood the asset’s long-term investment potential. Lenders typically look for consistency in historical operating statements and had initial reservations with the recent ramp-up in net operating income.”
To overcome this, Newmark and Olive Hill reportedly leveraged their local market knowledge to prove that the property’s current rent levels were sustainable and on par with the market and to justify the projected rents the property would achieve on completion of the renovations.
The $41 million loan came from a life insurance company represented by Newmark. The 10-year loan was structured with a seven-year interest-only period, followed by an amortization of 30 years. There is also an earn-out that allows up to $10 million in additional funding if certain NOI thresholds are met.
“While the term ‘creative office’ can be interpreted in a variety of ways, for us it includes flexible workspaces and open floor plans, exposed high ceilings, outdoor amenity areas, and modern interior décor, all of which serve to encourage creativity and collaboration,” Tim Lee, Olive Hill’s VP of corporate development and legal affairs, told Commercial Property Executive.
“We’re applying this in practice and expanding our on-site amenities to convert our property into a true creative office campus. By integrating upgraded seating areas throughout the courtyard, bike-friendly pathways, and a bocce ball court, among others, we’re delivering a live/work/play environment that will enable our tenants to attract and retain their best employees,” concluded Lee.