“Angelenos who own businesses in our city deserve peace of mind,” Los Angeles Mayor Eric Garcetti said in a statement Tuesday, adding that eligible tenants will have up to three months following the end of the local emergency period to repay any back due rent. “The moratorium will help ease some of the deepest concerns while we get through this crisis together.”

In San Francisco, Mayor London Breed’s moratorium would prevent any small to midsized business that make less than $25M in annual gross receipts from being evicted. The eviction moratorium will be in effect for 30 days starting March 17, and can be extended for another 30 days.

The moratorium evictions on commercial tenants come on the heels of similar moratoriums by those cities to help residential tenants.

San Diego is also drafting an ordinance to halt residential and commercial evictions, which the council will vote on next week. At least 14 cities across the state are weighing similar eviction bans.

The moratorium comes at a time when businesses across the state such as restaurants, bars, nightclubs, quick-serve restaurants, malls and office buildings have either closed or are opening at limited capacity to prevent the spread of the coronavirus. As of Sunday afternoon, California had 1,500 positive coronavirus cases and 27 deaths, according to state health officials.

Under normal state law, municipalities are prohibited from regulating commercial evictions but given the current crisis, Newsom on Monday allowed for it after signing an executive order. But market stakeholders have several questions. Will building landlords, those who retail and office tenants pay, receive relief from banks or credit unions during the moratorium? Can landlords ask for partial rental payments during this period so that they can continue to operate?

Newsom’s executive order asks financial institutions holding home or commercial mortgages to implement a moratorium on foreclosures. It is unclear how cities could enforce that.

“For a lot of these things, the devil is going to be in the details,” Cox, Castle & Nicholson partner Corin Korenaga said. “What we’ve seen to this point are only announcements … Those announcements have just set up a general framework. We haven’t really seen the actual ordinances.”

Korenaga said it is still early, but he and his company have received calls from concerned landlords about this situation. One landlord called asking how he should respond after a commercial tenant told him he wasn’t going to pay rent. “Now, we’re seeing the ripple effects of this,” he said.

Korenaga said it is clear that the moratoriums are not deferring rent payments. “Tenants remain obligated to pay rent during the moratorium,” Korenaga said. “Landlords simply cannot evict during the moratorium.”

Landlords and property owners have questioned the mayors move especially since, so far, they are not seeing any relief. Though landlords agree that this is an unprecedented time and want to support their tenants, the moratoriums don’t relieve them of their duties to pay rent. Landlords also have to pay a mortgage and other workers servicing that building.

“Legally, the city can do it,” Rising Realty Partners CEO Chris Rising said of the moratoriums. “But this absolutely does not relieve a tenant from their rent obligation. They have a lease. The order doesn’t deal with a landlords ability to service their mortgage or pay people in the buildings to perform services if there are tenants who cannot pay rent. So there are a lot of unanswered questions.”

Rising, whose companies own and manage a $1.5B portfolio totaling 5M SF of commercial real estate in Southern California and Denver, said restaurants and bars in his buildings have been hit the hardest.

“I know some of them have been able to switch to takeout and delivery only, but they are not going to see the same amount of volume that they had before,” Rising said.

Sonnenblick Development Chairman Bob Sonnenblick said any moratorium on evictions needs to be done bilaterally so that it benefits both tenants and landlords.

I understand [what the mayors are trying to do] but the problem is when every tenant in the entire city stops paying rent, and the landlords look to their lender and say, ‘I’m not allowed to evict this tenant, Mr. Lender can you please stop asking me to pay my mortgage?’ If the lender says no, as an owner, I’m in big trouble,” Sonnenblick said.

Sonnenblick, who owns office buildings in Los Angeles, isn’t personally affected, because most of his tenants are federal and local government agencies. However, as a building owner, he understands the plight owners and landlords go through if a tenant can’t pay rent.

“This is a two-part structure and solving only half the problem is going to create huge foreclosures when every tenant stops paying rent,” Sonnenblick said. “If the tenants stop paying rent and the owners can’t pay their mortgage, they’ll go into default and the banks are going to foreclose. You’re going to see mass foreclosures across the city.”

For Rising, he understands what his tenants are going through and plans to support them, and April 1 is right around the corner. He plans to speak with his tenants and his lenders to see how they can work through this.

“Everyone is so universally affected,” Rising said. “This isn’t like the tech boom and bust. This is a national emergency. Everyone is talking about how this compares to post-9/11. But this is not like 9/11. We are in a time of war. But we’re going against this virus and doing things that have never been done.”

IMN Real Estate Conferences Inc. has announced that Los Angeles-based real estate developer Bob Sonnenblick, Chairman of Sonnenblick Development LLC, has been chosen to speak on the keynote panel at their upcoming Hotel Construction and Development Conference on October 28th at The Miramar Fairmont Hotel in Santa Monica, California. Mr Sonnenblick will be joined on the panel by senior executives from Kimpton Hotels & Margaritaville Hotels.

3:30 PM Revenue-Driving Trends in Architecture & Design

• What are the efficiencies and challenges in bringing supertall developments to market in Southern
• California? How can this positively or negatively impact the guest experience?
• What goes Into the alternative material and construction process decision?
• What steps have you taken to create a more efficient, flexible, and cohabitation-friendly environment for living and working? Where have you seen or applied this concept in practice, and how has this new concept been received by guests?
• How do you balance cost-effective architecture with an enhanced guest experience? How does lighting design
  play a role in the guest experience?
• What Is your definition of efficient design?
• Where have you seen brand integration succeed or fail within an architectural design?
• What do you consider top renovation ideas that will help your hotel stand out and increase revenue?

Boutique Hotel Project on Greater Los Angeles’ Sunset Strip Expects September Opening

Rendering of the West Hollywood Edition Hotel and Residences. Illustration: CoStar

The owners of the upscale West Hollywood Edition Hotel and Residences in greater Los Angeles have secured a $300 million, floating-rate loan just months ahead of the boutique property’s anticipated grand opening in September, when it will join several competing developments on the famous Sunset Strip.

Global commercial real estate advisory firm Newmark Knight Frank arranged the refinancing on behalf of the owner, a partnership between New York developer Witkoff and Miami investment company New Valley. The loan was provided by investment bank and financial services company Deutsche Bank and stock brokerage and investment banking Mirae Asset Daewoo in South Korea.

The 190-room hotel with 20 luxury condos is under construction at 9040 Sunset Blvd., in West Hollywood, a tony city between Hollywood and Beverly Hills in the heart of metropolitan Los Angeles,

The developers said they opted to refinance to retire a construction loan following the completion of the project this year.Edition Hotels is a brand by hotelier and real estate developer Ian Schrager, who was also the co-founder of New York’s famed Studio 54 nightclub, in partnership with Marriott International. The West Hollywood property will feature a rooftop pool, a fitness center and spa, and views from downtown to the Pacific Ocean.

“The world-class hotel and condo development represents a truly one-of-a-kind experience for visitors and tenants,” Dustin Stolly, vice chairman and co-head of debt and structured finance at Newmark Knight Frank, said in a statement.

The development is among several new projects headed to the Sunset Strip, an indication of the strong demand and high prices the coveted West Hollywood market can dictate. Among other projects are actress Gwyneth Paltrow’s Arts Club, a London-based social club and hotel development, and the proposed $300 million 8150 Sunset Blvd. commercial-residential project that could replace a retail center with a landmark Lytton Savings bank.

Sales prices for hotels in the area are among top in the county. For instance, 1 Hotel West Hollywood, formerly known as the Jeremy West Hollywood Hotel, at 8490 W. Sunset Blvd., sold for $283 million, or $989,510 per room, in 2017, according to CoStar data.

With so much similar development proposed or underway, the project could face ample competition. It may also open up to a slowing economy that could push down nightly rates as U.S. economic growth nears a record 10-year streak that many analysts expect to cool in coming years.

Last year was the eighth consecutive year of record tourism for Los Angeles with 50 million visitors on record, according to the Los Angeles Tourism & Convention Board.

The project, designed by architectural designer John Pawson and architectural firm HKS Architects, also has more than 11,000 square feet of meeting space and approximately 16,500 square feet of hotel terrace space that could draw in additional crowds.

For the Record: The Newmark Knight Frank team was led by Dustin Stolly and Jordan
Roeschlaub, vice chairmen and co-heads of debt and structured finance, along with Nick Scribani and Chris Kramer, managing directors at NKF.

February 14, 2019 Joseph Pimentel, Bisnow Los Angeles

Sonnenblick Development Chairman Bob Sonnenblick has had enough with the high cost of doing business in Los Angeles, Orange County and California in general.

The price of land and construction costs are so high in Los Angeles and across markets in California, that Sonnenblick said he has decided to move and already directed $400M in new investments to Florida.