Introduction to the Deal
CIM Group, led by Shaul Kuba, Richard Ressler, and Avi Shemesh, has sold an 11-acre West Hollywood studio campus known as The Lot at Formosa to a sidecar fund for $229.8 million. The deal involves a complex financial arrangement where CIM essentially sells the property to itself through a Delaware shell company it controls.
Details of the Sale
The sale was facilitated by a $155 million loan from Blue Sky Servicing, a lender registered to the same address as CIM. This loan allowed CIM to pay off a $150 million loan from a private debt fund linked to AllianceBernstein, a global investment firm. A spokesperson for CIM described the transaction as a "recapitalization" that was approved by an independent committee within the company.
History and Development of The Lot
The Lot at Formosa, located at 1041 North Formosa Avenue, has a rich history in the film industry, dating back 107 years. CIM has owned the property since 2007 and has recently invested in its redevelopment, adding three new office buildings and two parking garages. The complex comprises seven sound stages and offices, spanning a full block on Santa Monica Boulevard.
Recent Tenants and Significance
The Lot has attracted significant tenants, including HBO, which signed a long-term lease for 161,108 square feet of production space in 2021. More recently, Miramax, the production company founded by Harvey Weinstein, signed a 16,000-square-foot deal to make The Lot its new headquarters. These signings underscore the property’s importance in the film and television production industry.
Financial Arrangements and Lenders
The transaction involves a sidecar vehicle, Blue Sky Servicing, which provided the necessary financing for the acquisition. This arrangement allowed CIM to refinance its debt with AllianceBernstein. Additionally, there are indications that hard money lender Hankey Capital backed the sidecar deal, although the company’s founder, Don Hankey, declined to comment on the matter.
Conclusion
The sale of The Lot at Formosa to a sidecar fund controlled by CIM Group for $229.8 million represents a significant financial maneuver in the real estate and film production sectors. The deal highlights the complex financial arrangements and partnerships involved in large-scale property transactions. It also underscores the ongoing demand for studio space in West Hollywood, driven by major players in the entertainment industry.
FAQs
- What is the nature of the sale of The Lot at Formosa?
The sale is essentially a recapitalization where CIM Group sells the property to a sidecar fund it controls for $229.8 million. - Who provided the financing for the acquisition?
Blue Sky Servicing provided a $155 million loan for the acquisition, which allowed CIM to pay off its existing debt. - What is the significance of The Lot at Formosa in the film industry?
The Lot at Formosa is a historic studio campus that has been home to the production of several notable films and television shows, including HBO’s "True Blood," "Big Little Lies," and "Euphoria." - Who are the recent notable tenants of The Lot?
Recent tenants include HBO, which signed a long-term lease, and Miramax, which made The Lot its new headquarters. - What is the role of Hankey Capital in the deal?
Hankey Capital is believed to have backed the sidecar deal, although the company’s involvement has not been officially confirmed.
