East End Studios Seals $130M Construction Loan for LA Production Space
Centennial Bank and Monroe Capital provided the financing for the 250,000-SF project
By Nick Trombola June 17, 2024 10:00 am
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How do you get a lighting operator to work for free? Tell him to do it for exposure. What does it take to build a production studio in Downtown Los Angeles? About $230 million and a lot of moxie.
East End Studios, a division of New York-based real estate investment firm East End Capital, has secured $130 million in construction financing to build a more than 250,000-square-foot studio in Downtown Los Angeles, Commercial Observer has learned. East End’s capital partner is providing the remaining funding for the project, which cost about $230 million total.
Centennial Bank provided a senior loan in the deal, while Monroe Capital provided mezzanine financing, according to CBRE (CBRE) Senior Vice President Greg Grant, who helped arrange the loans.
The project, dubbed East End Studios – Mission Campus, is planned for 5 acres at 2233-2241 Jesse Street in the Downtown Arts District. Once completed by the end of next year, the facility will contain five soundstages spanning 100,000 square feet, as well as over 150,000 square feet of post-production workspaces, offices, talent suites and commissary space.
Despite a challenging capital markets environment for the real estate industry at large at the moment, let alone for an asset class as specialized as production studios, Grant said that securing a sizable financing was made possible by East Ends’ commitment to the project and its understanding of Downtown L.A.
“[East Ends’] expertise and familiarity with the studio ecosystem in Los Angeles is what allowed us to capitalize this project,” Grant told Commercial Observer. “When people think about production studios in L.A., they naturally think about Hollywood, but in reality there’s quite a few spread around the city, including Downtown. Building in the Arts District also allows East End to take advantage of everything else being created here, leveraging its restaurants and other amenities.”
To Grant’s point, Mission Campus isn’t East End’s first studio project in the L.A. Arts District.
The firm is also in the process of building its sprawling ADLA campus, just west of the L.A. River from the Mission Campus, at the intersection of Sixth and South Alameda streets. Spanning over 15 acres, 16 soundstages and over 330,000 square feet of office and support spaces, ADLA will be one of the largest independent studio campuses in California once completed next year.
L.A. has the largest concentration of film and production facilities in the U.S., with over 7.3 million square feet to date, according to CBRE. Studio space has been in demand as well lately, with annual occupancy of nearly 94 percent between 2016 and 2022.
But then 2023 happened. The double whammy of the Screen Actors Guild – American Federation of Television and Radio Artists and Writers Guild of America strikes last year heaped on an enormous challenge for an industry just finding its footing in the wake of the COVID-19 pandemic, let alone for development and brokerage teams attempting to market a 5-acre studio project for financing north of $100 million.
Still, despite the risk, East End and its financiers pushed through and managed to get the project off the ground anyway, Grant said. More than that, Grant’s team managed to secure funding for the project on spec — an unusual deal for an unusual project at an unprecedented time.
“At the end of the day, our lenders saw through the uncertainty and have an incredible amount of conviction in this project and in East End.” Grant said.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
