Hackman and Affinius Secure Hollywood Studio Refinancing

Lenders just closed a refinancing deal for one of Hollywood’s oldest continually running film studios.

Wells Fargo Bank and Barclays provided Hackman Capital Partners and Affinius Capital a three-year, $165 million financing package for Raleigh Studios, a 314,940-square-foot film studio on Melrose Avenue, Commercial Observer reported. The debt amounts to $524 per square foot.

Netflix leases most of the property as a global hub for some of its biggest-budget deals, including projects with production companies owned by Barack and Michelle Obama, Prince Harry and Meghan Markle, and Shonda Rhimes.

The financing will be used to repay $135 million of existing debt. The property has been fully occupied since 2018, with Netflix taking up 94 percent of the space. The streaming giant is about halfway through a 10-year lease at the property, where it’s required to spend a minimum amount on lighting and grip equipment each year. MBS Group, a production service and equipment provider affiliate of Hackman, manages the property.

Raleigh Enterprises has maintained ownership of all or some of the property since 1979 and has invested $40 million on renovations and expansion over the years. Today, the Los Angeles-based firm holds 30 percent ownership. Aside from Netflix, the rest of the space on the campus is taken up by a Raleigh affiliate leasing 10,050 square feet and smaller leases with Technicolor Federal Credit Union and Sunshine Kids.

Raleigh Studios was founded in 1915 and boasts 13 sound stages with 135,350 square feet of office and support space. Hackman acquired a 36 percent ownership stake in the studio after the pandemic, while Affinius, under its previous name Square Mile Capital, took a 34 percent ownership piece.

Film and TV production in Greater Los Angeles has tumbled in recent years as companies look outside Hollywood to film their projects, avoiding high production costs and industry unpredictability. Production activity in the L.A. region fell more than 22 percent in the first quarter, L.A. Business First reported. Studio occupancy last year was at 63 percent, down from 69 percent the year prior.

In an attempt to lure filmmakers back to town, Gov. Gavin Newsom last month signed into law an increase on the state’s film and TV tax credit program to raise the annual cap from $330 million to $750 million. The law also increased the percentage of a production’s qualified expenditures that can be offset by tax credits from 20 percent to 35 percent.

In the meantime, some studio owners are turning to adaptive reuse, while others are hopeful the industry in Los Angeles will bounce back and crews will fill their soundstages once again. — Chris Malone Méndez