Cheap debt might be impossible to score, but companies are still managing to push through financing deals in a high interest rate environment.
The Ratkovich Company and JPMorgan secured a $41 million loan on its recently purchased Culver City office development at 5950 Bowcroft Street, the firms announced on Monday.
Torrey Pines Bank, a subsidiary of Western Alliance Bank, provided the non-recourse loan, which would give the lender control of the property in the case of default. Lenders have been hesitant to pony up non-recourse debt since interest rates started rising and office sales have waned, given the associated risk.
The loan bears interest at the secured overnight financing rate plus a low single-digit spread, the firms said. As of Jan. 6, SOFR stood at 4.31 percent, up from 0.7 percent in June, before the Fed started hiking rates to combat inflation. The firms called the financing “extremely favorable.”
A team led by JPMorgan’s Michael Friedman and Cushman and Wakefield’s Rob Rubano and Brian Share secured and arranged the financing, respectively.
Ratkovich and JPMorgan bought the four-building property for $49.6 million in October, records show, and plan to redevelop it into office space. The firms are hoping to lure in a tech, entertainment or media tenant.
Located near the intersection of Jefferson and Obama Boulevards, the property is near Amazon, WarnerMedia, Sony, among other tech companies, and about a mile from where Apple is building a 536,000-square-foot office campus.
Despite the big names, almost a third of all office space is available for lease in Culver City, according to Savills, more than L.A.’s average availability of 26 percent.
The Ratkovich Company has plowed ahead with financing deals over the past six months, despite rate hikes. In November, the firm and its joint venture partner Jerico Development scored $90 million in financing on their 42-acre redevelopment project along the San Pedro waterfront.
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