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Harbor Associates refis Westwood office after taking it back
Loan for $36M will cover existing debt on building where occupancy has improved to 77%
Harbor Associates and F&F Capital Group have refinanced an office building in Westwood, six months after taking it over through a deed-in-lieu of foreclosure, The Real Deal has learned.
Harbor scored a $36.3 million loan from Argentic Real Estate Finance to refinance 1640 Sepulveda Boulevard, a 158,000-square-foot office building, according to a report from ratings agency KBRA. The five-year loan will be packaged into a commercial mortgage-backed securities deal and sold to investors.
Harbor is paying interest at a fixed rate of 7.48 percent on the loan, according to KBRA.
The firms are using the proceeds to refinance existing debt — a loan obtained by the previous owner, a venture led by Goldman Sachs.
The Goldman Sachs-led borrowers bought the property for $92.5 million in 2018, or roughly $585 a square foot, records show, from Ocean West Capital Partners, which continued to hold a stake in the property. The firm used two loans for the acquisition: $32 million from The Northern Trust Company and $45 million from JPMorgan Chase Bank.
In December, JPMorgan sold off the loan to Harbor, when the property was about 66 percent leased, according to KBRA.
Income at the building dropped to $6.7 million in 2023, compared to $7.3 million in 2022, according to KBRA, which brought net cash flow down 17 percent to $3.5 million in 2023.
The same month, Ocean West handed over the property to Harbor and Bascom through a deed-in-lieu of foreclosure, which relieved the firm of $60.7 million in debt and allowed all to avoid the costs and time associated with a foreclosure.
The property is now valued at $56 million, or $354 a square foot, according to KBRA, a 40 percent discount compared to what Ocean West paid for it.
Since acquiring the building, Harbor and Bascom have signed new tenants to about 18,500 square feet, bringing occupancy to 77 percent.
Shout! Factory and Therabody are the two largest tenants at the property, each taking up about 15,000 square feet.
“After several years of kicking the can down the road, we are now beginning to see distress hit the market,” Harbor principal Joon Choi said at the time of the deed-in-lieu. “There are still compelling opportunities to find hidden gems at a deep discount to replacement.”