An Orange County-based investment firm has secured a loan to buy more than 1,000 apartments in downtown Los Angeles.
MF1 Capital, a partnership between Berkshire Residential Investments and Limekiln Real Estate, provided a three-year, $328.8 million loan to Laguna Point Properties, according to JLL, which arranged the financing for the borrower.
The variable rate loan includes two one-year extension options.
Laguna Point will use the funding to purchase five buildings in downtown LA totaling 1,037 units – four pre-war buildings and one property built in 1959. All were renovated between 2007 and 2010. Public records show that the properties were previously owned by DTLA Management, run by Eric Shy.
The addresses of the properties are as follows: 548, 600 and 650 South Spring Street, 111 West 7th Street and 215 West 6th Street, all in an area known as the Downtown Historic District.
“The timing couldn’t be better, given recent occupancy gains and rental dynamics,” said Garrett LaBar, Laguna Point’s chief acquisitions officer.
The median monthly rent for a one-bedroom apartment in downtown Los Angeles rose 14% year-over-year this month to $2,725, according to Zumper. Yet median rents have not returned to pre-pandemic levels.
In October 2019, the median monthly rent for a downtown LA apartment was $2,988.
New buildings at Laguna Point will have to compete with the influx of new apartments over the past five years. Since 2017, more than 10,000 apartments have been built in downtown Los Angeles, more than any other location nationwide, according to RentCafé.
MF1’s new funding is backed by a $1.47 billion debt fund from Boston-based Berkshire, which closed last year. In 2020, MF1 – the company with New York-based Limekiln Real Estate – issued more than $2.3 billion in loans for multifamily properties in the United States
In January, MF1 provided Brookfield with a $220 million refinance package for Two Blue Slip – a New York development with 421 apartments.