Press, Real Estate

Asian Box Raises Expansion Capital For Additional Restaurants

Palo Alto, CA. – January 6, 2015 – Asian Box Holdings, Inc. (“Asian Box”) today announced that it has secured an investment from the Horowitz Group, a leading single family office based in Southern California. The funding will accelerate Asian Box’s growth plans. Terms of the transaction were not disclosed.

Founded in 2012, Asian Box has quickly grown to five fast-casual restaurants in Northern and Southern California. Asian Box is a healthy Vietnamese street-food dining experience. Customers are attracted from a broad demographic to taste the sauces, marinades and dressings all made fresh and in-store. Offerings are made to order and highly customizable while maintaining the highest level of transparency and authenticity.

Frank Klein, Co-Founder and CEO of Asian Box, said: “I can’t be more pleased about our new partners at the Horowitz Group and our immediate potential for growth. Asian Box has a true cult following, and we look forward to bringing our delicious food to new locations and customers. Freshness is paramount to our company ethos, and we will continue to deliver on our brand promise.”

Grace Nguyen is the Co-Founder and Executive Chef at Asian Box and came to the company having worked with some of the finest chefs in the country, including Charles Phan at his world famous Slanted Door and Bush Street OTD restaurants in San Francisco. Grace was raised in a traditional Vietnamese family where she began cooking with her grandmother at an early age and has brought so many of these childhood flavors to the Asian Box menu.

“It all starts with the food, and Chef Grace has an uncompromising approach to quality that is apparent in each Box served,” said Adam Horowitz, President of the Horowitz Group. “We are thrilled to partner with an energetic management team and support a restaurant concept with such inspiring cuisine. Asian Box has the opportunity to be the pre-eminent restaurant group in the Asian fast-casual space, delivering high-quality ingredients, for time-sensitive consumers, at a compelling price.” Adam Horowitz will join the Board of Directors. Davis Wright Tremaine acted as legal advisor to

Asian Box. Sklar Kirsh LLP as legal advisor to Horowitz Group.

Press, Real Estate

Bel Air Residents Head To Court To Restrict Big Mansions

The mansions of Bel Air once deemed extravagant can seem positively modest today. Rising prices and a robust economy have speculators rushing to develop the next generation of posh estates, some of which rival the size of shopping centers.

That’s good for builders, real estate agents and the handful of buyers able to afford such massive homes, but the trend has enraged many nearby residents – some of whom are seeking to block new projects in court – and intensified a feud within L.A.’s community of land-use attorneys.

“Conflicts are a material part to all lawyers regardless of the practice area, but it’s specifically a larger issue when you’re a land-use attorney,” said Andrew Kirsh, real estate practice chair at Century City law firm Sklar Kirsh. “If you are a developer’s counsel, a developer is not going to want you to represent a homeowners association against other developers.”

Such is true for land-use lawyer Edgar Khalatian, partner in the downtown L.A. office of Mayer Brown. Santa Monica developer Ty Cueva hired Khalatian after the newly formed Bel Air Homeowners Alliance denounced the builder’s plans to construct a 40,000-square-foot mansion on Somma Way.

The alliance – headed by Fred Rosen, former chief executive of Ticketmaster – claims the project, which includes indoor and outdoor pools, among other amenities, will bring a slew of safety hazards. The dispute, which landed in Los Angeles Superior Court late last year, is set for a hearing early next week to determine a trial date.

 

Plans for Cueva’s lavish estate are in many ways not unlike other large home sites in Bel Air and other hillside communities where the super-rich reside.

 

But Rosen is not impressed. In May, he formed the alliance to fight homebuilders and urge the city of Los Angeles to impose stricter regulations. He fears construction trucks weaving throughout the windy Bel Air roads will create a major safety hazard for residents.

 

“We’re not anti-development, because people should be able to build what they want. But there should be more restrictions,” he said. “Here’s the problem: You have 1980 regulations for 2014 and 2015 technology and everything’s out of whack.”

 

Lawyers divide

Rosen’s group is using the California Environmental Quality Act as the core of its opposition to Cueva’s project. It’s a law that has been roundly criticized by business groups for prompting frivolous litigation and stalling development.

 

And so begins the split among land-use attorneys.

 

“CEQA is an environmental statute, intended to ensure the public and decision-makers have full knowledge of the environmental impacts of a certain project,” said Khalatian, Cueva’s lawyer. “It’s not intended to kill the development of a single-family house and, in this case, I believe CEQA is being misused.”

 

Indeed, the law is most actively employed when it comes to large commercial projects.

 

Pasadena land-use lawyer Robert P. Silverstein is perhaps among the best known – or notorious, depending on which side one is on – of the attorneys using CEQA to oppose projects throughout Los Angeles. He’s had a string of successes delaying or stopping developments in Hollywood, including the Millennium Towers proposed atop a disputed earthquake fault line.

 

“This canard that CEQA is misused to stop good development is just a lie,” Silverstein said. “By nobody’s definition is building skyscrapers on top of an earthquake fault good development.”

 

The community of land-use attorneys in Los Angeles who fight development is relatively small compared with those representing developers.

 

“To do this type of work requires a healthy dose of idealism and willingness to be David against Goliath,” Silverstein said. “It is a risky business model that first and foremost requires a philosophy of wanting to protect the little guy.”

 

Not all land-use attorneys find such stark divides.

 

Benjamin Reznik, a partner at Jeffer Mangels Butler & Mitchell, is among the few willing to fight on both sides of the issue.

 

In Bel Air, for instance, Reznik represents an angry resident opposing a hillside mansion and has also been retained by celebrity developer Mohamed Hadid to fight a separate battle in the same neighborhood.

 

“Some of the projects I’ve seen are more aggressive, more bold certainly compared to prior years and prior boom times,” Reznik said. “For me, it’s not an ideological issue. Not all proposals are equal in terms of potential impacts on the neighbors.”

 

Neighbors unite

Rosen began rallying his neighbors when plans for a more than 70,000-square-foot estate on Airole Way were unveiled. The site is not far from Loma Vista Drive in Beverly Hills, where two Los Angeles Police Department officers were killed in separate collisions with trucks early last year.

 

Though the alliance did not oppose that project, now under construction, Rosen argued massive residences like it pose similar risks for out-of-control construction vehicles. He formed the alliance with the goal of persuading the city to think twice before approving such large projects.

 

“Building and Safety should be called Building and Hauling. Safety is not a consideration,’” he said. “They’re more interested in protecting developers than residents.”

 

Rosen, chief executive of the alliance, is now alongside four other well-to-do Bel Air residents on the organization’s board.

 

Hayward D. Fisk, former vice president at Computer Sciences Corp., is its chairman; treasurer is Daniel Love, owner of real estate development company Perranporths; and retired attorney Jamie Meyer is secretary. The final board member is Marcia Hobbs, president and publisher of the Beverly Hills Courier, which has run numerous stories supporting the alliance.

 

Rather than mobilizing to oppose a single project, critics claim the alliance was formed to challenge virtually all new construction in Bel Air. If so, there are plenty of potential targets.

 

As of Dec. 12, 15 new houses were under construction in Bel Air, with 15 city-approved routes for trucks to haul soil and building materials in and out of the neighborhood, according to Noah Muhlstein, planning deputy in Los Angeles City Councilman Paul Koretz’s office. So far, the alliance has denounced four haul routes, claiming they bring extreme safety hazards to the hillside community.

 

Cueva’s proposed mansion on Somma is one of the projects contested by the alliance and the first to have the dispute land in court.

 

The organization funds its battles with contributions from about 100 members, Rosen said, each paying $5,000 to join the effort. Board members continue to host supporter events each month to entice more disgruntled neighbors to toss some cash their way.

 

Stacey Brenner, a land-use and development consultant not involved in the Somma dispute, said other homeowner groups use settlement money from other disputes to fund future litigation.

 

“In the mediation process, one of the terms is to have all the attorney’s fees paid upfront before litigation,” she said. “That sends a red flag because they could use that money to appeal another project and/or toward a future lawsuit.”

 

Still, it’s unclear whether the alliance will bring more disputes to court.

 

“Our aggression is a result of the disrespect this community has been shown by various city agencies,” Rosen said. “This is just the beginning. Time will tell how things evolve, but I think it’s important to know we took this action.”

Press, Corporate

Sklar Kirsh Counsels Hybrid in Recapitalization

Ropes &; Gray provided counsel to Palo Alto-based private equity firm Altamont Capital Partners in the majority recapitalization of Fox Head Inc., a motocross and apparel company based in Irvine, Calif. Altamont led the shareholder group through the transaction. Shareholders included athletes Ricky Carmichael and Carey Hart and strategic supply chain partner Hybrid Promotions LLC.

San Francisco-based partner Howard Glazer led for Ropes & Gray. Additional help was provided by New York-based partners Leo Arnaboldi III and Steven Rutkovsky and Boston-based partner Edward Black.

Latham & Watkins partner Michael Treska led the team advising Fox Head. Hybrid Promotions turned to Los Angeles-based corporate, land use and real estate firm Sklar Kirsh for outside counsel and relied on Bowen Tax Law, based in Palos Verdes Estates, Calif., for guidance on tax, executive compensation and benefits issues. Hybrid CEO and founder Jarrod Dogan was represented individually by Los Angeles-based Greenberg Glusker Fields Claman &; Machtinger partner Andrew Apfelberg. Peter Fox, president and CEO of Fox Head, reached out to Wolf Group L.A. attorney Michael Abrams for representation.

Press, Real Estate

Echo Park landmark Jensen’s Recreation Center sold

Jensen’s Recreation Center, a 1920s landmark in the heart of Echo Park, has sold for $15 million.

Vista Investment Group, a Los Angeles real estate investment firm, bought the three-story brick building at 1706 Sunset Blvd. and vowed to spruce it up.

The 50,000-square-foot brick structure near Echo Park Lake has retail and office space on the ground floor and 46 studio and one-bedroom apartments upstairs. Tenants include Blue Bottle Coffee and Sage Vegan Bistro.

Jensen’s Recreation Center was one of the first buildings in Los Angeles to feature a mix of residential and entertainment uses. It was declared a Los Angeles Historic Cultural Monument in 1998.

When completed in 1924, the building included a bowling alley and billiards parlor. The original 17-by-28-foot articulating incandescent sign that depicts a bowler throwing a strike remains on the roof.

Vista will invest as much as $1.25 million in improvements including upgrading the building entry, lobby and other common areas, Vista President Jonathan Barach said it will also fully restore the historic rooftop sign.

“Jensen’s Recreation Center is a neighborhood treasure in one of the trendiest pockets in Los Angeles,” he said. “

Vista acquired the building from Sunset Holding Co. in an off-market transaction, said attorney Andrew Kirsh, who arranged for Vista to assume the existing mortgage.

“Vista has had its eye on the property since acquiring its first asset in Echo Park in 2010,” said real estate broker Darin Beebower of Madison Partners, who represented both parties in the transaction.

Press, Real Estate

Historic Mixed-Use Fetches 15 Million

An old mixed-used in Echo Park has been picked up by Vista investment Group for $15M. The LA Firm plans to freshen up the 90-year-old building.

Vista President Jonathan Barach (pictured with wife Sunny) says Jensen’s Recreation Center underwent recent renovations, including upgraded plumbing and electrical, a new roof and refinished hardwood floors in residential units. Vista will put $1.25M into the property to upgrade its entry,lobby and other common areas. Jensen’s has 46 studio and one-bedroom apartments, which are fully leased, in addition to 21k SF of ground floor retail and commercial space, which is 96 percent leased.

Vista’s lawyer Andrew Kirsh (pictured with wife Courtney and their newborn daughter Clementine) says one of the hurdles was Vista had to assume the existing financing on the property. Vista will also completely restore the historic rooftop sign, which depicts a throwing a strike.

The 50k SF brick and terracotta building on Sunset Boulevard was built in 1924, originally with a billiards parlor. With those old-timey origins in mind, the building was declared a Los Angeles Historic Cultural Monument in 1998

Press, Real Estate

Real Estate Boom Has Land-Use Practices Rising

As the local real estate market has improved, local real estate attorneys practicing land-use law are seeing a resurgence in business. In fact, the industry’s boost prompted Century City corporate and real estate transactional law firm Sklar Kirsh last month to launch its own land-use practice.

“The first couple years coming out of the recession in 2012 and 2013, most of the focus of our client base was on existing properties and repositioning them,” said Andrew Kirsh, founding partner. “When we headed into 2014 and throughout 2014, new opportunities expanded into new ground-up development, which is now happening all over.”

Andrew Kirsh and Jeffrey Sklar started their firm early last year with four other attorneys. The increased demand for real estate counsel has since led the boutique firm to beef up its staff to 18 lawyers.

Meantime, projects that stalled after the economy tanked have recently begun to resurface, said Matthew Hinks, a partner in the land-use practice at the Century City office of Jeffer Mangels Butler & Mitchell.

A prime example is a massive mixed-use development on Grand Avenue in downtown Los Angeles. The project, located across from Walt Disney Concert Hall, was originally approved in 2007 but came to a screeching halt shortly thereafter.

“It was quite the controversy as to whether or not that project would ever break ground,” Hinks said.

But last month, the project’s first phase – a 271-unit luxury high-rise apartment building – finally opened. The outcome, however, didn’t reflect the initial plans from seven years ago.

Plans for the Grand Avenue project changed, much like other developments that were put on hold. The alterations meant the project had to first obtain new entitlements, Hinks said, which generated more business for land-use lawyers.

As more old projects continue to once again see the light of day, Hinks said he expects his plate will stay full. The same is likely true for other L.A. real estate and land-use practices.

“The outlook is we’re going to stay busy for quite some time,” he said.

Press, Real Estate

Historic downtown Los Angeles high-rise sold to Canadian investors

A historic office high-rise in downtown Los Angeles that has been converted to an apartment building has been sold for $43 million to an affiliate of giant Canadian landlord Retirement Concepts.

The landlord bought National City Tower, which was completed in 1924 to be the headquarters of National City Bank of Los Angeles. It was redeveloped in 2008 as a residential complex with 93 units ranging in size from studios to three-bedroom apartments.

The new owners plan to spend an additional $1 million on improvements to the building at 810 Spring St., said Joe Moosa, president of Retirement Concepts Developments. Upgrades will include a new gym and media room in the basement and improvements to the tenants’ rooftop deck.

“We’ll just take it one more level up,” Moosa said.

Downtown Los Angeles will continue to improve, he predicted. “We truly believe in everything the city is doing in rejuvenating downtown L.A.,” he said. “Five years from now it will be a destination on the West Coast that the world doesn’t have now. We are investing in that vision.”

The 12-story bank building was designed by architects Albert Walker and Percy Eisen, whose works include the James Oviatt Building and Fine Arts Building, both downtown, and the Beverly Wilshire Hotel in Beverly Hills. National City Tower was designated a Los Angeles Historic-Cultural Monument in 2007.

Beverly Hills investor Shahriar Afshani was the previous owner of the building, according to city documents.

Commercial tenants in the building include restaurants Terroni and Peking Tavern. Crane’s Bar serves drinks behind the former bank vault door.

“Global investors are recognizing that downtown Los Angeles is well on its way to becoming a true 24-hour city,” said Sklar Kirsh attorney Andrew Kirsh, who advised the buyer in the acquisition. “Buildings such as the National City Tower with character and a rich history are generating the most interest from buyers.”

Retirement Concepts is a private real estate investment group based in Vancouver, British Columbia. Its holdings include senior housing communities as well as apartment, hotel and office buildings.

The National City Tower units will remain market-rate apartments and will not be converted to senior housing, Moosa said.

Press, Real Estate

Flattening Credit Curve Spurs Demand For Mezzanine Debt

A flattening credit curve is leading to greater demand for mezzanine debt among commercial real estate borrowers. “When the credit curve is steep, each incremental dollar of debt is expensive. When it is flat-and it has flattened quite a bit-there will be even more pressure among borrowers to put leverage on, ” said a lender at an insurance company.

 

The last time credit curve saw substantial flattening was in 2006-2007, when BBB-rated CMBS were in the range of swaps plus 85, and AAA-rated, super-senior bonds were trading at swaps plus 60. While the differential isn’t as narrow right now-BBB bonds are at around swaps plus 272, while AAA bonds are at 52-it’s substantially flatter than when BBB-rated bonds were trading at swaps plus 800- 900 at the height of the credit crisis, market players told REFI.

 

CIT Real Estate Finance started to see more borrower requests for mezzanine debt at the start of the year. “It’s a function of developers wanting to put in as little equity as possible,” said Matt Galligan, president. “As the years have gone by, the spreads on mezzanine debt have diminished. Spreads are 8-12%, depending on risk, and the number of mezzanine lenders is amazing.”

 

Market players told REFI the capital structure has been capping out at 85%, with the bank market at 65-70% and the mezzanine market at 15%. For floating-rate loans, borrowers are seeing pricing of about 3-3.5% all in.

 

From a borrower’s perspective, the choice to tap the mezzanine market is easy to understand, said Andrew Kirsh, co-founder of law firm Sklar Kirsh, which works with commercial real estate borrowers and lenders. “If you can get a 65% senior loan and finance a portion of the remaining 35% with additional debt, a mezzanine loan is generally less expensive than equity,” he said, noting that mezzanine lenders also don’t share in the profits the way equity investors do. “When borrowers take on mezzanine debt, they have to act on their business plan efficiently and effectively because it’s like there’s a gun pointed to them that is fired every month,” he added.

Karlin Real Estate, which mainly targets transitional assets, has been getting more requests in recent months for mezzanine loans of three to five years where the sponsor is taking some lease-up or rehab risk, said Larry Grantham, managing director.

 

Rick Jones, a partner at law firm Dechert, noted a concern in today’s market is the amount of capital chasing transactions, particularly on the subordinate debt side. “It’s hard to make money anywhere across the capital stack. Margins are being compressed and people are running harder to make as much money as they made last year. Last year, we were all geniuses. This year, it’s no longer easy,” he said.

Press, Real Estate

Crowdfunding Players Look to Expand Reach to Real Estate Funds

Players in the nascent commercial real estate crowdfunding sector are looking to expand into the commingled fund business.

 

Sponsors in the sector have generally raised capital from individual accredited investors and invested that in single properties, < often through operating partners. They identify potential investments, raise capital from screened investors and manage the distribution of investment returns to investors. They’re now expanding into real estate funds.

 

Realty Mogul of Los Angeles has been leading the charge and has already raised equity that was invested in a number of funds. For instance, it raised $3 million of the $20 million raised by a fund, Affordable Housing Community Fund 4 LLC, that was sponsored by Dave Reynolds, a Cedaredge, Colo., mobile-home park specialist. It buys manufactured housing communities across the country.

 

Jilliene Helman, Realty Mogul’s chief executive, anticipates expanding to include raising capital that would be invested in funds pursing opportunities in the multifamily, office, retail and self-storage sectors.

 

She expects Realty Mogul to raise $2 million to $5 million of equity for each of the funds in which it would invest.

 

Investors participating in Realty Mogul’s offerings would become members of a limitedliability company that then would invest in the funds it targets. So, although each LLC could represent dozens of investors, the funds that get their equity would deal with only one investor.

 

Since the investment funds that Realty Mogul would back could be as small as $20 million in total equity, its commitments could account for a sizeable 10 percent or more of their total equity. However, Helman expects to ultimately also raise equity for some slightly larger funds as well.

 

“We’ll be able to get those funds to reach out to thousands of investors they could not reach otherwise and we’ll be letting our investors get further diversification,” she said.

 

Realty Mogul, with about 10,000 accredited investors registered on its site, has raised some $25 million of equity for real estate investments since it was founded early last year.

 

Among its individual property deals, it provided $3.5 million, or 80 percent of the equity that a San Francisco area investor used in a $15 million acquisition of a shopping center in that city, and it provided $1.5 million or 17 percent of the equity used in the purchase and renovation of a Palm Springs, Calif., hotel. CrowdStreet Inc., another crowdfunding operation, plans to soon start targeting investments in funds. Darren Powderly, co-founder of the Portland, Ore., company, said it soon will raise equity that would be invested in one property fund and would be raising equity for others.

 

It will likely raise $1 million to $2 million for the funds in which it would invest. It would raise its capital in increments of $25,000 to $50,000 from its registered investors.

 

Both Powderly and Helman are looking to raise equity for real estate investment managers that have at least about $100 million of total assets under management. CrowdStreet may make exceptions for smaller managers that have funds with distinctive investment strategies.

 

Their success with funds could pave the way for other crowdfunders to expand in that area.

 

Crowdfunders typically are paid fees by the sponsors of the investments for which they raise equity.

 

However, there are less than 20 established real estate sector crowdfunders, by most accounts, while only a handful have completed deals and most have been for small amounts.

 

Among the established players, Fundrise of Washington, D.C, is in the market raising equity for deals that include a planned $450,000 investment in a mixed-used redevelopment in Brooklyn, N.Y.

 

Despite the relatively small amounts of equity being raised, the market of accredited investors is vast. There were 8.6 million households in the United States with net worths of at least $1 million in 2011, according to Spectrem Group, a Chicago research firm.

 

Meanwhile, the crowdfunding market could dramatically increase in size as a result of a regulatory proposal that would allow even non-accredited investors to participate in sponsored investments.

 

Crowdfunding, which also is used to raise equity for investments in other types of business projects, was provided for by the Jumpstart Our Business Startups, or Jobs ct of 2012. The law’s final regulations, including the expansion to non-accredited investors are being prepared by the SEC.

 

The final regulations could also make crowdfunding tougher by requiring sponsors of investments to disclose additional information about their operations, and setting requirements for crowdfunders that opt to also market to non-accredited investors.

 

Whether accredited investors will flock to crowdfunding sites in order to invest in commingled funds remains to be seen. Many funds already reach out to them directly and through registered investment advisors or financial counselors.

 

“As an investor, it’s a question of who do you want to take your advice from in deciding which funds to invest in,” said Shawn Haghighi, a partner in the real estate practice of the Sklar Kirsh law firm in Los Angeles, whose clients include crowdfund operators and investment fund managers. “Crowdfunding sites are for the most part new to the game, and the question would be whether they have the right professionals to pick the best fund managers, or do you go to an investment consultant who’s been doing this for some time.”

Press, Real Estate

NoHo Haul

A live/work loft complex in North Hollywood sold last week for almost twice as much as it went for just two years ago.

 

L.A. real estate firm Vista Investment Group bought the 68?unit complex at 5255 Cartwright Ave., known as the NoHo Lofts, for $18.7 million, or about $275,000 a unit. The seller, Westwood investment firm CityView, made a hefty profit on the property: It originally purchased the complex out of foreclosure in 2012 for less than $9.9 million.

 

The former warehouse in the North Hollywood Arts District was built in 1958 and converted into luxury Live/work units in 2006. It has one and two level units with polish concrete floors and 25 foot ceilings. The building, about 97 percent occupied at the time of sale, is occupied by a variety of artists and business owners who work in industries such as graphic design, music, architecture, advertising and postproduction. The units are not subject to rent control.

 

Jonathan Barach, president of Vista, said his firm will invest an undisclosed amount of capital into upgrading unit interiors and shared building amenities, such as fitness center, club room and rooftop deck.

 

“Through thoughtful branding, contemporary updates and active participation in the community, we plan to become the destination among artists and innovators in the Arts District.” he said.

 

Andrew Kirsh, a partner at Century City law firm Sklar Kirsh who advises Vista, said the purchase also includes a 15,200 square foot parcel of land across the street at 5354 Denny Ave., which is fully entitled for up to 20 more units and 80 parking spots.

 

“Our clients were attracted to this asset class because of the higher returns they can achieve compared to traditional multifamily.” he said.

 

Kitty Wallace of Colliers International represented both the buyer and seller in the deal.

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