Los Angeles developer snags $239M loan for luxury high-rise

Dive Brief:

Developer Genton Property Group (GPG) has secured a $239 million loan for the Four Seasons Residences project in the upscale Beverly Hills area of Los Angeles, and construction is already underway, according to the Los Angeles Business Journal. The total cost of the project is expected to be $300 million.
The U.K.-based Children's Investment Fund (CIF) provided the $239 million loan for the project, which developers said will fill a gap in the available stock of ultra-luxury condominiums in the area.
GPG has already secured $147 million in contracts for the building's units, which start at about $3,000 per square foot. The project is expected to cater to foreign investors as well as wealthy bi-coastal prospects who want a second home in Los Angeles.

Dive Insight:

This deal is proof that there is money to be had for luxury residential projects if the location and the offering are right. Experts told Construction Dive that construction loans fall under the category of high volatility commercial real estate, which are subject to stricter banking regulations. This has traditional lenders pulling back when it comes to construction financing.

Even in a place like Miami, where good weather and the laid-back tropical lifestyle touch every street corner, successful projects have to offer up something special like a location in a hot neighborhood or a waterfront view.

Developer Related Group announced in April that it was shelving its Auberge Residences & Spa Miami project after only 15% of the 300 units were put under contract during presales. Timing was not on Related's side with this particular endeavor as the developer came to market just as the overall condo environment was demonstrating signs of oversupply and weakening.

However, not far from the Auberge site is CMC Group's 64-story Brickell Flatiron condominium tower, which scored a $236 million construction loan in April. One of the reasons developers were able to grab the interest of lenders is that 60% of the building's 549 units were snapped up during presales.

Because the traditional lending market is somewhat constrained these days, developers often turn to other sources of financing, like the CIF, which has been active in the U.S. luxury residential market. Last month, developer HFZ announced that it had secured a loan through CIF for the $1.9 billion, Bjarke Ingels–designed Eleventh condominium project in New York City. HFZ will begin presales later this year for the project.