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Tuesday, Mar 19, 2024
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Olen Turns to Lending; $100M for Downtown Deals in LA, Chicago

Olen Properties Corp. has made its mark over the years as a real estate owner and developer in Orange County and the nation.

Now the Newport Beach-based company, OC’s second-largest commercial property owner, has another growing line of business: lending.

The privately held company has made loans believed to be in excess of $100 million in recent months, capped off by a deal that will help fund the redevelopment of a prominent 32-acre site in downtown Los Angeles.

The company acted as the lender for the just-completed $78 million refinancing of L.A.’s Alameda Square and the 7th Street Produce Market properties, according to Igor Olenicoff, Olen’s president.

Evoq Properties

The deal, which closed last week, was made with Los Angeles-based Evoq Properties Inc., owner of Alameda Square, a site encompassing close to a full city block near downtown L.A.’s arts and garment districts.

Evoq is the successor company to Meruelo Maddox Properties Inc., a high-profile and politically connected company led by developer Richard Meruelo that went bankrupt in 2009.

Redevelopments of the Alameda Square and Produce Market sites are said to be a top priority for Evoq, which has shed other area buildings in recent months but remains one of the largest real estate owners in downtown L.A.

Alameda Square counts four older warehouses that total about 1.4 million square feet; locally based clothing company American Apparel occupies about half of that space and has its headquarters and thousands of production workers there.

The redevelopment plan aims to turn the site into an “apparel campus,” according to Paul Brindley, senior managing director for the Los Angeles office of brokerage and investment advisory firm Holliday Fenoglio Fowler LP, who helped arrange the financing deal.

Other apparel companies inking leases for space in the area of late include Greensboro, N.C.-based VF Corp. and upstart garment maker Groceries Apparel, which will have its headquarters at the site.

Growing Source

The financing deal with Evoq represents a growing source of business of late for Olen, according to Olenicoff, who the Business Journal estimates to be OC’s second-wealthiest person, with a fortune valued at $2.75 billion.

“More and more so, in order to deploy our liquidity, Olen has resorted to making mortgage loans on everything from (high-rises) to smaller loans around the county,” Olenicoff said last week.

Olen is believed to be the biggest office landlord here besides Newport Beach-based Irvine Company. It isn’t known to have acquired any buildings in the Orange County area since buying a Santa Ana business park for $24.5 million a little more than a year ago.

It appears the company has had an easier time finding real estate deals worth financing in recent months.

Olenicoff said his company recently struck a financing deal with a hotel under the upscale JW Marriott brand in downtown Chicago.

The 610-room hotel is owned by a venture led by Chicago-based Prime Group Inc.

Olen’s deal for the hotel is believed to be a mezzanine loan. Trade publication Commercial Mortgage Alert reported late last year that Prime Group was looking to get a $33 million mezzanine loan for the hotel to pay down more than $200 million in senior debt it has tied to the property.

Chicago is the site of the most prominent building in Olen’s nearly 7.7-million-square-foot office portfolio, the 40-story One South Dearborn tower.

The JW Marriott takes up 12 floors of a 22-story former bank headquarters building.

Prime Group is said to be looking to sell the office portion of the building, which runs about 337,000 square feet; it is not known whether Olen has interest in buying that portion of the building.

It isn’t the first time Olen has acted as a lender for other real estate companies.

’80s

Olen loaned upward of $140 million to other real estate companies in the 1980s.

When the market went south, Olenicoff sued a number of those companies to get the money back, in many cases taking over their real estate.

That isn’t an expected outcome for the latest investments, according to Holliday Fenoglio Fowler’s Brindley, who worked on the Alameda Square financing deal with colleague Jeff Sause.

Olenicoff in this case “is just being creative with his capital,” Brindley said.

The deal offers him “a good yield, and he’s comfortable with the collateral,” he said.

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