Ara Tavitian scores $150M refi on The Reef in DTLA
Deutsche Bank provideS 10-year loan on 807K sf mixed-use development
Ara Tavitian has scored a $150 million refinancing deal on The Reef mixed-use property in Downtown L.A., as he pushes ahead with a $1.2 billion redevelopment plan, The Real Deal has learned.
Deutsche Bank provided the 10-year, interest-only loan to Tavitian, a physician and the founder of Kanon Ventures, according to reports from DBRS Morningstar and public records filed with Los Angeles County. Most of the loan was used to refinance $123 million in debt provided by Citibank, with the rest to buy out equity and for closing costs.
Tavitian could not be reached for comment.
Located at 1933 South Broadway, the property has long been a wholesale center for the home furnishings trade and spans 807,000 square feet of office, showroom, event and retail space. Tavitian bought the property for $53.5 million in 2012, records show.
Since then, Tavitian has planned to redevelop the property to add a 208-room hotel, more than 1,400 apartments and 67,000 more square feet of retail and restaurant space — a project that was estimated to cost about $1.2 billion.
In 2020, the developer and The Reef were allegedly tied to a bribery scandal involving former Councilman Jose Huizar. No specific charges were ever made against Tavitian or his development firm.
While neither the hotel or apartment plans have come to fruition, Tavitian has already spent more than $90 million to renovate the property, adding a creative office component and three large billboards that are visible from the I-10 and I-110 freeways, according to DBRS Morningstar.
The billboards cost Tavitian $17.6 million, but have proved lucrative. From April 2021 to April of this year, the billboards generated $14.3 million in sales from companies including Verizon, AT&T, Coca-Cola, TikTok and Disney.
The rest of the property is leased to 76 tenants, the largest being the County of Los Angeles’ Department of Children and Family Services. The department has occupied part of the building since 2011 and recently expanded its space to take up 202,400 square feet at the building, from an original 142,400-square-foot lease.
The county pays $24.84 in base rent per year, according to the ratings agency’s report.
Other tenants at the property include Shipfront — an e-commerce and logistics company — and Maker City, an event and trade show operator that hosts film, art, music and fashion exhibits. Maker City occupies about 149,000 square feet at the property, paying $29.70 per square foot in annual rent.