Perseverance Rewards DJM With $70M Recap of SoCal Mixed-Use Waterfront Asset
DJM Capital has landed a $70 million loan to recapitalize a Southern California mixed-use waterfront property, one year after nearly reaching the finish line at the onset of the COVID-19 pandemic.
The private equity real estate developer inked a $46.5 million loan from Prime Finance, plus an additional $24.5 million of new funding from Arc Capital Partners, for its Lido Marina Village property in Newport Beach, Calif., last month. The recap — which will pay off an existing bridge loan from Oaktree (OAK-A) Capital and fund new renovations at the 116,000 square-foot Newport Harbor development — was nearly completed just prior to the crisis beginning in March 2020.
“When COVID hit, a lot of the finance markets, interest in doing retail recaps became more scarce,” said DJM President Lindsay Parton. “We thought we had it done before COVID, and then we sort of had to start it all over again.”
The debt package, now a year in the making, was arranged by Steven Bram, David Pascale and Patrick O’Donnell of George Smith Partners. Bryan Ley and Geoff Tranchina of JLL (JLL) arranged the equity portion of the deal.
Situated at 3434 Via Lido on the Balboa Peninsula, Lido Marina Village features 14 waterfront structures with offices and eateries that include Orange County’s only Nobu and Malibu Farm restaurant locations. The property also consist of high-end retailers Elyse Walker, LoveShackFancy, Serena & Lily and Jenni Kayne.
Huntington Beach, Calif.-based DJM acquired Lido Marina Village in 2013 from Vornado Realty Trust (VNO) as part of a $35 million deal, and has since performed extensive renovations as well as rebranded the property to attract tourists.
Parton stressed that successfully recapitalizing Lido Marina Village in a COVID-19 climate underscores the resilience of the property, in terms of maintaining a low vacancy rate with high rent collections throughout the pandemic. He noted that Nobu’s 2020 volume being only around $10,000 less than 2019, despite shutting down for three months, shows the strength of a waterfront location with a strong tenant mix.
“It has really resonated with the Newport Beach customer and the Orange County customer,“ Parton said of Lido, which was only about 40 percent occupied with many party boats, prior to DJM acquiring it. “There is nothing like this in Newport Beach, or really in Orange County, that has the shopping and dining right on the water.”
While extensive renovations have already been completed at Lido, Parton said infrastructure improvements are still needed for about two-thirds of the marina, in order to accommodate larger boats and yachts that want to dock there. He said the renovations would also allow it to add new businesses following the expiration of some legacy tenants.
Despite challenges with the COVID-19 pandemic, DJM signed several new leases late last year, including luxury consignment retailer The RealReal, specialty bakery Rye Goods and fine jeweler Marrow Fine.
“The DJM team has done an incredible job of redeveloping and remerchandising Lido Marina Village,” Neville Rhone Jr., co-founder and managing partner of Arc Capital Partners, said in a statement. “The property is a best-in-class example of a dynamic mixed-use environment.”