$79M Crossroads Marketplace Sale Yields Low Cap

CHINO HILLS, CA-In a deal with a remarkably low cap rate for these troubled times, a 263,757-square-foot portion of the 539,270-square-foot Crossroads Marketplace has sold for $79 million. According to Phil Voorhees, a senior vice president in the Newport Beach, CA office of CB Richard Ellis, the deal’s 5.87% cap rate is the lowest achieved this year in the western US for any property valued above $21 million.

Voorhees, who represented the seller with CBRE colleagues Todd Goodman and Kirk Brummer, says the low cap rate was made possible by the generous terms of the property’s original $63 million loan, which the buyer was able to assume for a 0.5% fee. The seller, an undisclosed high net-worth private investor from the Pacific Northwest, acquired the property for $75 million in late 2007. He persuaded the lender to provide a 10-year loan at a 5.43% interest rate with interest-only payments through the entire term.

“It was the height of the real estate boom, and lenders were being very competitive,” Voorhees tells GlobeSt.com. “They felt this was a low-risk deal because so many tenants were in place under long-term leases that still had years to run. But because it’s an interest-only loan, the cash-on-cash return for the buyer is very strong.”