HomeStreet Lends $22M on 1031 Deal in LA County
By Greg Cornfield April 23, 2020 1:20 pm
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HomeStreet Bank provided a $22.4 million acquisition loan for a recent 85-unit multifamily trade in Los Angeles County, which was part of a 1031 exchange.
The property, South Hills Apartments in West Covina traded for $32 million last month. The buyer is an entity linked to Orange County-based investors Doug Kerstner and Martha K. Kerstner, according to property records. The LLC is also tied to James Bailey and Madelyn Bailey.
The lender provided a seven-year loan with an interest rate of 3.75 percent, according to information from IPA Capital Markets, a division of Marcus & Millichap (MMI) Capital Corp. (MMCC), which brokered the financing and represented the buyer. The note is structured with three years of interest-only payments followed by amortization on a 30-year schedule.
The 1031 exchange included the sale of a multifamily property in L.A.’s Hancock Park neighborhood at the beginning of the year, according to IPA. The Kerstners and Baileys sold a 78-unit apartment building at 410 North Rossmore in Hancock Park for $29 million, or $371,794 per unit, to a joint venture between Domos and ESI Ventures.
IPA did not disclose the lender nor borrower, other than to identify the buyer as a private Orange County-based private family. HomeStreet was identified as the lender in public financing documents.
Michael Derk with IPA and Nick Gray with MMCC arranged the financing for the West Covina sale. MMCC’s Tyler Leeson, Matthew Kipp and IPA’s Kevin Green represented the buyer in the sale and purchase of both assets in the 1031 exchange.
“Only three of Hancock Park’s 19 apartment buildings, 50 units or greater, have sold in the past five years and this is one of them,” Green said in a statement regarding the 410 North Rossmore sale earlier this year.
South Hills Apartments, at 2900 East Virginia Avenue and 217 South Barranca Street, was originally built in 1966, and is located just off the San Bernardino Freeway near the Eastland Center and Cortez Park.
