Community Development Bank Lends $8 Million to Furniture Firm
In its largest loan to date, the Los Angeles Community Development Bank has committed $8 million to help a Latino-owned office furniture manufacturer buy the 21-acre downtown Los Angeles complex of U.S. Foodservice, formerly Rykoff-Sexton.
The group of aging buildings at 7th and Alameda streets contains nearly 1.5 million square feet of space, the largest industrial real estate transaction this year, said Ron Bagel, president of Donaty Group, one of the brokers.
The deal also brings another furniture manufacturer to a small but growing cluster of such companies downtown.
The Community Development Bank will finance $8 million of the $20 million transaction--expected to close today. The arrangement will help counter criticism that the federally funded bank has been slow to meet its lending promises.
“This goes a long way to give everyone confidence in the ability and promise of the Community Development Bank,” said Deputy Mayor Rocky Delgadillo, whose business team helped bring about the sale over the last three years. “This is the kind of deal that we had always hoped would be a lightning rod for other investment in the inner city.”
The buyer, Richard Meruelo, president of TechSystems Group, said that within three months, he will move his high-end custom office furniture company into the building in phases from Pomona.
Under terms of the sale, U.S. Foodservice will lease one of the site’s buildings for five years, keeping 350 jobs in Los Angeles that the company had planned to move to its La Mirada plant.
Meruelo will also lease space to produce wholesalers who occupy surrounding marts. City officials said the leases will help retain the produce industry downtown.
In addition, the Pomona company joins a small group of furniture-manufacturing and design firms that had left Los Angeles but recently returned to the downtown area, Delgadillo said.
“It’s not just a home for our manufacturing company,” said Meruelo, whose family has owned property downtown since 1972. “We think it’s a tremendous purchase of real estate and something we plan on holding in the whole family for a long time.”
The Community Development Bank’s largest loan before today was $6 million, part of an $8.5-million acquisition of a dairy by Copeland Beverage. All other loans have been in the million-dollar range or much smaller.
The bank was formed with $430 million in federal funds in 1995 after the city failed to win a federal empowerment-zone designation.
It won the designation earlier this year, boosting incentives and tax breaks for businesses in the industrial areas covered by the bank.