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Highland Realty Capital Secures $40 Mil for Two SoCal Acquisitions

3/23/16

El Segundo-based Highland Realty Capital has closed on $40 mil of acquisition financings for two LA-area properties. One of the transactions was for Victory Studios in Glendale and the other was for a mixed-use property in Hollywood.

In Hollywood, Highland sourced a joint venture equity partner for Hileman Cowley Partners in their acquisition of Victory Studios, a state of the art television production and broadcast center located at 1840 Victory Boulevard in the heart of the Burbank/Glendale media triangle. The 56.5k sf building was acquired for $15.4 mil, as reported by RENTV at the time a couple of weeks ago.

The building is currently 100% occupied by Telepictures Productions, a division of Warner Bros Entertainment Inc, which has occupied the property since 1994. Telepictures is best known for the production of the television shows Extra, The Ellen DeGeneres Show and TMZ.

Hileman/Cowley purchased the property through a complex arrangement that involved acquiring both an existing ground lease and the underlying land each being held by different entities. “The business plan was longer than the typically 3-4 year equity fund timeframe and we wanted to find capital with a lower preferred return so our client wouldn’t get buried behind an accruing preferred return on a low yielding deal during the remaining time of the existing lease,” says Mike Guterman, principal at HRC who along with Brad Sevier handled the transaction. San Diego-based LM Advisors provided an attractive structure for Hileman/Cowley to execute their business plan. The equity was paired with a non-recourse, fixed rate bank loan.

Andrew Burke and Mark Evanoff of Avison Young represented the seller in the transaction. The buyers represented themselves.

In the second transaction, Highland identified a San Francisco based debt fund to provide a $20 mil+ loan and close within three weeks of an executed application. The multi-acre property, residing in the Hollywood Hills, consists of the multiple uses including apartment rentals. “New leases were signed during escrow which enabled the lender to underwrite the property as a cashflow loan, thereby lowering the cost of capital dramatically,” says Guterman, who handled the transaction on behalf of the sponsor.

Kitty Wallace and Steve Algermissen of Colliers International, along with Michael Albert of KW Commercial, represented the seller.





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