Acquisition & Redevelopment

PROBLEM

The New York based owner of this approximately 100,000 SF building on 3.67 Acres was facing the impending challenge that their single-tenant building was about to be vacated. The building had been occupied by Wella (Formerly a Proctor and Gamble brand) for many years. Compounding this challenge was that the owner had a loan coming due on this property at the same time the tenant was vacating which made it very difficult to refinance the project. Given the circumstances and the fact that the property was a corner lot located in the Warner Center Specific Plan the property was ideally suited for a future multifamily redevelopment and therefore was a “land play”. The owner was not familiar with developing in Los Angeles so they elected not to redevelop the property but rather sell it. However, they needed to identify a developer that both understood the market and could purchase the asset expeditiously with all-cash given the impending vacancy and loan due date. The owner had fallen out of escrow a couple of times with other local and institutional developers that could not execute on the purchase due to site challenges such as; easements, development restrictions, etc.

SOLUTION

Our team at Lineage Asset Advisors had been speaking with the New York based owner, their broker, and their attorneys about the development site for many years. Lineage understood the unique challenges with the site and the underlying value of the land given the ability to develop . Further, our team understood that there were very few developers that could execute the purchase within the strict parameters that ownership was setting on the sale. Leveraging its relationship with local private developers Lineage was able to bring in a local multifamily developer that understood the challenges and could execute on the purchase. Lineage worked with all parties to negotiate the most realistic deal for all involved and assisted in the navigation of the due diligence and many hurdles that the developer faced in acquiring the property.

OUTCOME

After a complicated negotiation and due diligence process which identified additional site restrictions and challenges, the developer purchased the site. Lineage Asset Advisors represented the buyer in the transaction which sold for $16,100,000 and closed in August 2017. The owner was able to pay off their debt and move on from a difficult situation and the developer was able to purchase an exceptional future development site with interim cash flow and incredible long term potential.