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The Real Deal Los Angeles

Chinese investment funds nab majority stake in Ratkovich’s Alhambra complex

Elite, Future Land want to build multifamily project on parking lot at site
By Katherine Clarke | February 03, 2017 09:30AM

Wayne Ratkovich and the Alhambra

A partnership led by the Ratkovich Company and American International Group has sold a majority stake in the Alhambra, its 45-acre mixed-use office campus in Downtown Alhambra, to two new partners, The Real Deal has learned.

ELITE International Investment Fund, a privately-owned real estate investment management company with offices in Beijing, Los Angeles, and New York, and Shanghai-based Future Land Holdings have acquired an undisclosed majority stake in the project, according to sources close to the deal.

Ratkovich retains a minority stake in the project and will remain on as the general partner, overseeing day to day operations. AIG has exited the deal.

The sale of the property, at 1000 South Fremont Avenue, helps the previous partnership pay off an existing $130 million CMBS loan attached to the property, which had been transferred to special servicing amid concerns of a default. The securitized loan was originated by Goldman Sachs a decade ago and was classified as non-performing as of last month, according to data from real estate analytics firm Trepp.

“This recapitalization paves the way for new opportunities for the Alhambra and its role as an important mixed-use hub in the local community,” said Bill Zhou, managing partner at ELITE. “As part of this newly formed ownership venture, we’re excited to begin this new chapter and have high hopes for the future successes of the property.”

Zhou declined to comment on the value of the investment or on the specific size of the new partners’ stake in the complex, but AIG paid $198 million for its stake in the project in 2006, records show.

Zhou told TRD that the new partners plan to bring a new multifamily complex to a parking lot on the site, pending entitlements. The parcel was previously approved for 600 units or 700 units, he said.

“The project has cash flow from day one,” he said of the office component.

The push to find a new partner or lender to refinance the property follows rumblings for years that the 1 million-square-foot facility had been slow to fill. It reportedly lost two large tenants to bankruptcy and reorganization shortly after the recession.

But the recapitalization comes on the heels of two recent transactions, which bring the complex to 75 percent leased. The County of Los Angeles Parks and Recreation Division will move its new department headquarters into 55,583 square feet of office space at the property, while the University of Southern California’s Keck School of Medicine will expand into an additional 22,475 square feet to enhance its USC Care program, Ratkovich said.