Prime Lands $947M Refi for West Coast’s Largest Multifamily Property

Park La Brea. Image courtesy of Prime Residential

Prime Residential, owner of Los Angeles’ Park La Brea, the largest apartment community on the West Coast, has refinanced the historic multifamily property with a $947 million Freddie Mac loan that is expected to be securitized through its K-Deal program. The deal is possibly one of the largest multifamily finance transactions of 2023 and the largest single-asset financing since 2019.

The 10-year, fixed-rate loan was secured by Newmark Group for Prime Residential, a repeat borrower, to retire existing debt for the 4,249-unit rent-controlled apartment community. Prime Residential, a San Francisco-based owner and operator of more than 18,000 multifamily units on the West Coast, had received an $878 million loan from Freddie Mac in April 2015 that was also used to retire existing debt. Like the current refinancing, that loan was also expected to be securitized through Freddie Mac Multifamily’s K-Deal program. K-Deals are part of the company’s business strategy of transferring a portion of the risk of losses away from taxpayers to private investors who purchase the unguaranteed subordinate bonds.

The financing is the second-largest agency loan ever and is believed to be the largest single-asset financing ever executed by Freddie Mac. The transaction is also the fifth-largest single-asset U.S. multifamily loan of all time, Newmark Executive Vice Chairman Mitch Clarfield told Multi-Housing News.

Clarfield, along with Newmark Vice Chairman Ramsey Daya, Executive Managing Director Chris Moritz and Vice President Alex Newman lined up the new loan. Clarfield, in a prepared statement, said the team received interest from many different capital sources offering competitive terms, despite turbulent market conditions.

Newmark received interest from many different capital sources with competitive terms, despite market turbulence, according to Clarfield. “Life companies, CMBS and banks were all interested. The tightest spreads were offered by CMBS lenders.”

Clarfield said he was unsurprised at the level of interest. “Even in volatile times, lenders want to lend on the best assets, and Park La Brea is clearly one of the best assets that a lender could have in its portfolio.

With lending standards tightening, GSEs like Freddie Mac have been playing a crucial role in providing liquidity, especially for mission-rich and affordable housing. Clarfield noted that the loan includes the flexibility to construct a significant number of Accessory Dwelling Units on the property, which will help address the state’s housing and affordability crisis.

Prominent property

Park La Break is the largest housing community west of the Mississippi River, Clarfield noted. Sitting at 6200 West Third St., about 7 miles west of downtown Los Angeles near the Miracle Mile district, the property was developed between 1941 and 1950 by MetLife. It has been owned and managed by Prime Residential, previously known as Prime Group, since 1995. The property has 18 high-rise towers and 175 garden-style apartment buildings spread over 144 acres. The complex has about 10,000 residents and is about 95.5 percent occupied.

The community features studios and one-, two- and three-bedroom apartments, ranging from 580 to 1,381 square feet. The complex resembles a small city with 24-hour security patrol, landscaped courtyards, fitness trails, a WiFi café, movie theater, dry cleaner, fitness centers and electric car charging. There is also a swimming pool, clubhouse, business center and 5,000 parking spaces.

Park La Brea is located next to The Grove and Town and Country shopping centers and multiple bus stations. The community is also close to John Burroughs Middle School and Fairfax High School.

Other Prime Residential properties in Southern California include a pair of adjacent communities, Playa Pacifica and The Gallery, in Hermosa Beach, Calif., that were acquired in August 2021 for a total of $275 million, as well as Agave Ridge, a San Diego townhome community, purchased for $107 million in October 2020.