Dealmaker: Olive Hill Group Refis California Creative Office Campus

Olive Hill Group, Los Angeles, obtained $41 million in fixed-rate refinancing for its Courtyard at Culver Pointe, a Class A creative office campus in Culver City, Calif.

Newmark Realty Capital, San Francisco, secured the life insurance company financing. Newmark Principal Andy Bratt and Vice President Amit Tyagi led the debt-placement team. The ten-year loan was structured with a seven-year interest-only period followed by a 30-year amortization schedule.

Olive Hill Group acquired the office buildings in May 2016 for $65.6 million and recently launched a redevelopment program that will include upgraded seating in the courtyard, food truck loading zones and a bocce ball court.

“During our first year of ownership, we attracted high-quality creative and technology tenants at competitive rents, resulting in increased net operating income and significant additional value,” said Olive Hill Group Vice President of Corporate Development and Legal Affairs Tim Lee. 

Lee said market research and consulting firm Ipsos Insight and digital content provider Omnia Media signed leases since Olive Hill acquired the property. Existing tenants include DataScience and Paychex.

Tyagi said Newmark had to find a lender that understood the asset’s long-term investment potential. “Lenders typically look for consistency in historical operating statements and had initial reservations with the recent ramp up in net operating income,” he said. To combat this challenge, Newmark showed current rent levels are sustainable and on par with market values. The firm also prepared a pro-forma outlook and rental comps to justify the projected rents the property would achieve post-renovation.

By demonstrating the upward trajectory of rent growth at the property, Olive Hill Group was also able to structure an earn-out allowing up to $10 million in additional funding as certain net operating income thresholds are met.