Dealmaker: Quantum Capital Partners Secures $34M for Los Angeles Medical Offices

Quantum Capital Partners, Los Angeles, secured $33.5 million in permanent and construction financing for a 60,000-square-foot medical office building in downtown Los Angeles.

Quantum Capital Partners Managing Partners Jonathan Hakakha and Mike Yim led the financing assignment. “We accepted this construction assignment in early 2016 and immediately started introducing Robhana to several construction capital sources,” Hakakha said. “However, in mid-2016, the construction debt market started to shift due to newly enforced High-Volatility Commercial Real Estate regulations.”

New High-Volatility Commercial Real Estate rules were introduced in 2015. Since then, the Mortgage Bankers Association and other trade groups have repeatedly asked regulators to clarify key elements of the rule. The trade groups said that without modifications, the HVCRE rule could have an adverse economic impact on commercial real estate lending.

Hakakha said Quantum’s “proactive” approach–asking lenders to vet the sponsor early in the process–allowed them to move quickly when Robhana signed DaVita Healthcare Partners to a long-term lease for the entire building. “As construction financing continues to evolve, it’s important to have an experienced financial intermediary to help sponsors navigate the various new regulations,” he said.

When completed, the new DaVita Healthcare Partners outpatient facility will occupy a 2.9-acre site at 1120 West Washington Boulevard. Robhana acquired the development site in 2012 with financing arranged by Quantum.

In addition to the construction loan, the financing also included a permanent loan secured by the fully occupied 50,000-square-foot building adjacent to the new development. Hakakha noted that recapitalizing an existing building where cash-out proceeds are used for new construction on the same parcel presented a significant challenge.