LOS ANGELES, CA - Malcolm Davies and Zack Streit of The Davies Group at Los Angeles-based George Smith Partners, a premier commercial real estate capital advisory firm, arranged $53.7 million in non-recourse bridge financing for a six-property portfolio comprising three conventional multifamily properties and three co-living properties in Los Angeles. The financing was arranged on behalf of New York and Los Angeles-based Six Peak Capital and provided by MF1, which is a partnership between Berkshire Residential Investments and Limekiln Real Estate.
Located in submarkets with high levels of rentership, specifically Eagle Rock, North Hollywood, East Hollywood and Koreatown, the portfolio totals 118 units, comprising 278 beds, which are in various stages of lease-up. All six assets feature high-quality amenities, including central heat/air-conditioning, stainless-steel appliances, in-unit washer/dryer, rooftop decks and/or private balconies and luxurious finishes.
"The financing represents another milestone for the co-living asset class,” said Partner Chris Aiello at Six Peak Capital. “As Los Angeles continues to recover from the pandemic it will become apparent that this product type serves a missing middle renter and the backbone of LA's dynamic workforce. It will become clearer that investors in equity and debt need to add exposure to co-living as a subset of their multifamily investment portfolio, especially in the LA market.”
Co-living has become a popular, modern solution to the on-going housing shortage and affordability crisis in major cities like Los Angeles and New York City. As a relatively new asset class, co-living has allowed Millennials, Gen Z and others who are entering the workforce for the first time the opportunity to live in cities they otherwise would not be able to afford. Six Peak Capital found that throughout the pandemic, co-living remained resilient as tenants continued to lease co-living bedrooms despite an overall decline in occupancy rates across traditional multifamily properties.
“Newly delivered multifamily and co-living projects are a direct response to the lack of housing supply in core urban markets. The properties will provide high-quality, affordably priced housing for the community,” said Principal and Managing Director Malcolm Davies at George Smith Partners.
“It was an honor to represent such a high-quality sponsor; their extensive local knowledge and expertise in co-living was a major force in pushing this deal into fruition,” said Senior Vice President Zack Streit at George Smith Partners. “A deal of such complexity would also not be possible without a top-tier lender, who provided for a great execution.”
The six-property portfolio is well positioned to meet Los Angeles’ specific housing needs as population density continues to increase and affordability continues to decrease.
Davies and Streit, along with other Davies Group members, Senior Vice Presidents Drew Sandler and Alexander Rossinsky; Vice President Aiden Moran; and Assistant Vice Presidents Brandon Asherian and Ben Tracy sourced the financing on behalf of the sponsor.
About Six Peak Capital: Six Peak is a privately held real estate asset management firm, and a vertically integrated private developer of coliving assets in highly dense urban markets. Founded in 2016, Six Peak invests alongside institutional investors and private developers in purpose-built coliving real estate opportunities in gateway markets where affordable housing stock is grossly inadequate. Six Peak boasts a Los Angeles-based multifamily portfolio composed of 2,000+ beds across 900+ units. With $400+ million in total capitalization and $275 million assets under management, Six Peak is one of the pioneering investors and developers of coliving.
About MF1: MF1 Capital, LLC (“MF1”) is a mortgage REIT solely focused on providing capital to the multifamily sector, including bridge loans, preferred equity and special situations on multifamily properties. MF1 is led by several seasoned debt and multifamily professionals at Limekiln Real Estate and Berkshire Residential Investments.
About George Smith Partners: George Smith Partners is a leading national provider of capital market advisory services to the commercial real estate industry. The firm specializes in arranging financing for commercial and multifamily properties, including acquisition, construction, bridge and permanent loans, as well as mezzanine loans, highly leveraged loans and joint venture equity. The company has arranged more than $58 billion in financing since its inception.