American Assets Inc. of San Diego was the seller of the fully occupied Desert Palms, an infill asset at 3721-3923 Thomas Rd. "We like Phoenix," says Lynn Kehoe, Sarofim's senior vice president of marketing and client services. "We think it's a nice growth market." A Home Depot is located on the 47-acre parcel, but it wasn't part of the sale.
Desert Palms was built in the 1960s and redeveloped in 2000 by the locally based Cole Cos., which paid $26.7 million for the asset. Cole sold it to American Assets in 2003. Desert Palms' tenant roster is 80% national credit retailers. Among the 21 tenants are Staples, PetsMart, Dollar Tree, Quizno's, RadioShack and Payless Shoe Source. Its quoted rental rate is $24 per sf to $26 per sf, triple net.
Kehoe tells GlobeSt.com that Desert Palms has limited rollover exposure. "Our intention is to hold it as a core asset," she says.
According to a source familiar with the deal, Sarofim assumed a $21.4-million conduit loan with a 7.55% fixed-rate interest to acquire Desert Palms. Simon Honeybone and Jeff Chavez handled the acquisition for Sarofim. Patrick Walmsley of Secured Capital's Los Angeles office represented American Assets.
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