Stalled Project in L.A. Resurrected
- Nov 05, 2010
Los Angeles–Like so many developments that were stalled in the last couple of years because of financing issues, an 18-unit condominium project located at 817 Alfred St. between Santa Monica Blvd. and Melrose Ave. stood unfinished since 2005. Luckily for the neighborhood’s residents, for whom this steel and concrete frame came to be an eyesore, Sycamore Urban Properties decided to give the project a second chance.
Roughly 10 months after Sycamore acquired the note on the property, West Hollywood had a new condo project all ready to be sold. About one third of the units have now been sold or reserved.
“The property was being developed by a small developer with a bank backing it, but the timing was such that the developer took longer to get the property under construction and then the construction itself just took long,” Sycamore President Mitchell Bradford tells MHN. “They had issues with construction and issues with the bank because they had gone over budget.”
A bad economy combined with an inexperienced developer led to the failure of this project. Halfway into the construction, the bank did no want to fund their progress because the developer was several million dollars over budget and the bank wasn’t going to give them any additional dollars.
It was only about 60 percent complete when Sycamore took over. At that point they also discovered that the completion work that had been done wasn’t according to the plan and did not have sufficient inspections done. “We removed 45 to 60 tons of various construction materials to strip out some inaccurately constructed components. We took it back to 50 percent complete and then built it per plan and code to get it to where we are today.”
In buying the note for this property, Sycamore also avoided a long and costly foreclosure and bankruptcy process by negotiating a friendly transfer of the property with the previous developer. To finish the property, Sycamore also worked with the city of Los Angeles to renew all the project approvals, including working with local neighborhood groups to gain their support. “Sycamore Urban Properties has taken 817 Alfred from an unapproved, incomplete shell to a move-in-ready luxury condominium building,” says Bradford.
The company was able to do so because of its access to equity and debt, along with its expertise in the entitlement process, Bradford says. It also agreed to voluntary improvements to improve the neighborhood, including the repavement of a public street and alley, new landscaping, and a new stop sign to better control traffic.
The new homes at 817 Alfred range from 1,364 to 1,722 square feet with 9-foot ceilings in all living areas and private patios. The community features a rare rooftop sundeck and entertainment lounge with views of the Hollywood Hills and WeHo. Condo prices start at the low $600,000s, while the penthouse units start at the mid $700,000s.
Based on the feedback to the project so far, Bradford believes that 817 Alfred hit the mark and expects the community to be completely sold out by the end of the year.
Sycamore is currently tracking over $500 million in notes/properties that are either stalled, distressed or in the foreclosure process. The company plans to acquire 1,000 to 2,000 additional units over the next two to three years.