A historic Hollywood soundstage has landed a hefty financing package as other properties are testing their options, signaling a vote of confidence for marquee studio space in Los Angeles.
Hackman Capital Partners secured $165 million refinancing for the century-old Raleigh Studios in Hollywood, a 314,940-square-foot campus leased by Netflix and three other production firms. The deal marks a bright spot for a sector seeking to regain its footing in the wake of the pandemic, the 2023 entertainment strikes and other costly headwinds.
In an example of how some properties are faring better than others in the region, Hackman Capital Partners is looking to offload its smaller Saticoy Studios in Van Nuys. There is a growing divide among production spaces in the city, with prime, in-fill campuses showing resilience while older, secondary properties face stiffer headwinds, experts tell CoStar News.
“A tale of two cities evolves,” said Carl Muhlstein, principal at Beverly Hills–based Muhlstein CRE and a longtime Los Angeles broker. He said California’s expanded film and TV tax credit program is boosting activity, but no amount of subsidies will bring back the mid-2010s boom in demand for studio development and occupancy.
By locking in a new loan on Raleigh Studios, Hackman and its partners — Affinius Capital and longtime owner Raleigh Enterprises — are capitalizing on a stable income stream and high land value.
But the Van Nuys listing shows they are willing to prune assets that may not deliver the same long-term performance, even in a state where new incentives are aimed at keeping production local.
Raleigh Studios refinancing
Wells Fargo Bank and Barclays Capital originated the fixed-rate, interest-only loan for Raleigh Studios that's replacing existing debt, returning $26.9 million in equity to the sponsors and covering closing costs, according to a Morningstar DBRS presale report.
Raleigh Studios Hollywood, opened in 1915, is among the oldest continually operating film studios in the United States. Its 13 soundstages, production offices and support facilities were built between 1924 and 1989, with the most recent renovations completed in 2020.
The property has hosted productions ranging from the 1920 silent swashbuckler “The Mark of Zorro” to “Whatever Happened to Baby Jane?” and television shows like “Gunsmoke,” “Dallas,” “Let’s Make a Deal” and “Whose Line Is It Anyway?”
The three-year loan is secured by the borrower’s fee-simple interest in the campus in Hollywood’s Larchmont neighborhood, which has been fully leased since 2018.
Netflix occupies 93.9% of the rentable space at 2300 Melrose Ave. under a master lease running through November 2031, using the site as its hub for deals with high-profile producers including Shonda Rhimes, Barack and Michelle Obama’s Higher Ground Productions, and Prince Harry and Meghan Markle’s Archewell Productions. Three smaller production firms lease the remainder of the property.
Morningstar DBRS called the property’s long-term credit tenant, location and ownership “favorable credit characteristics” in its presale report.
Van Nuys listing
Hackman’s broader portfolio reflects the same emphasis on scale and prime location that underpins the Raleigh refinance.
The Los Angeles–based firm is the largest independent owner of studio assets in the world, with 19 studio properties among its 31 film, office, industrial, and mixed-use holdings totaling more than $10 billion in assets under management.
Hackman’s decision to refinance its flagship while testing the sales market for Saticoy shows where investors see the safest bets.
The contrast between the two properties is stark: Raleigh Studios is anchored by Netflix on a long-term lease and sits across from Paramount Pictures, while Saticoy caters to smaller-scale productions in the San Fernando Valley and lacks a marquee, investment-grade tenant.
CBRE is marketing the $18.08 million listing for the Van Nuys property — a 59,669-square-foot, purpose-built facility that opened in 2012 for live-audience productions at 16829 Saticoy St. That's in the Lake Balboa area of the San Fernando Valley, outside the traditional Hollywood-Burbank core where most major studios cluster.
Production headwinds
In a market still digesting pandemic-era shutdowns, labor strikes and shifting content strategies, location and tenant profile are increasingly determining which studios secure financing and which head to the sales block.
California’s expansion of its film and TV tax credit program in July — raising the annual cap to $750 million and boosting credit rates to 35% — is intended to help the region compete with other incentive-rich markets like New York, Georgia and even Texas. FilmLA has reported an uptick in television series applying for credits since the changes took effect.
Still, soundstage occupancy in Los Angeles fell to 63% this year, down from more than 90% before the pandemic and the 2023 writers’ and actors’ strikes.
Productions are increasingly selective about where they lease space, favoring fully equipped, centrally located facilities with established service providers over newer or repurposed properties in secondary locations.
Muhlstein said that dynamic is likely to persist. “State tax credits increase velocity,” he said, “but the mid-2010s are irreplaceable.”