Chicago partnership seeks financing for $44M Second Home project in East Hollywood
A joint venture between two Chicago-based companies, Bond Properties and Klaff Realty, wants to buy and renovate a Paul Rivere Williams-designed office campus in East Hollywood for Second Home, a London-based co-working company that will anchor it, The Real Deal has learned.
The joint venture is currently trying to raise $30.5 million in bridge financing for the acquisition and redevelopment project, which would see the 90,854-square-foot site at 1370 St. Andrews Place partially razed and then redeveloped into pod-style co-working spaces.
The total cost of the project would be $43.6 million, which would include the $20.7 million contract purchase price, a $20.3 million capital improvement plan, as well as loan costs, fees and an interest reserve, according to marketing materials obtained by TRD.
Second Home has already signed a lease for the property for an initial term of 20 years, but it would only commence if the proposed redevelopment is completed. The lease is valued at $20.7 million, with a base rent of $56.00 a foot, the documents show.
The Chicago JV, which has an exclusive partnership with Second Home to develop its co-working collectives in North American markets, plans to close on the site in July. The site is currently owned by Gaw Capital Partners, headed by billionaire real estate mogul Goodwin Gaw. The Gaw family is also an investor in Second Home, according to the marketing documents.
The purchase price of $20.7 million would be far more than the $11.45 million Gaw paid for it in 2015, property records show. Gaw did not respond to multiple requests for comment. A spokesperson for the HFF team leading the financing effort was not available.
JLL’s Nicole Mihalka, Tom Cherry, and Nick Niemann, as well as Mike Condon Jr. of Cushman & Wakefield, brokered the Second Home lease. They declined to comment.
One of the buildings currently on the site dates back to 1963 and was designed by Williams as the headquarters for the Assistance League of Southern California. That property would be renovated and upgraded to include an indoor garden reception area, a restaurant and bar and three, large group offices, conference rooms and a rooftop terrace, according to the materials.
Another property on the site would be demolished and replaced with Plexiglass pods. The pods would be surrounded with palm trees and lush vegetation.
Spanish architecture firm SelgasCano would design the project.
Tenants at Second Home properties pay approximately $120 a foot for their space, while tenants at competitors WeWork and NeueHouse pay about $130 and $200 a foot, respectively, according to HFF materials. Second Home, valued at $130 million as of July 2016, currently has a location in London’s East End and another in Lisbon, Portugal.
Katherine Clarke contributed reporting.