TUSTIN, CA-The sale of a 7,324-square-foot multi-tenant retail property at the northwest corner of Newport Avenue and El Camino Real Street here closed at a 6.31% cap rate and $552 per square foot despite the exit of four of the center's six tenants after the buyer arranged initial loan approval. According to president Rich Walter of Irvine-leased Faris Lee Investments, which represented the seller, three new tenants signed leases before the close of escrow after the Irvine firm extended escrow and recommended a new leasing team. The $4.05 million sale of the center is one of four recently closed retail sales in Orange and Los Angeles counties totaling $22 million in which Faris Lee was involved as either the listing agent, the buyer's agent or both.
In the Tustin deal, Pasadena-based Tustin Lam Wong LLC bought the center from Makena Great American of Mission Viejo for $4.05 million in one of the highest prices per square foot paid for a multi-tenant retail property in Orange County in the first two quarters of this year. The seller was represented by director of advisory services Shaun Riley of Faris Lee and the buyer by Ching Louie of Louie Properties. Built in 2006, the property is at 14001 Newport Ave.
The four initial vacancies also caused the lender to pull the initial loan assumption approval, according to Riley. Faris Lee worked directly with the lender and the buyer in order to obtain the loan assumption approval a second time with negotiated terms that were acceptable to the buyer.
Keeping the buyer interested in the property after four tenants vacated was difficult. “We had to focus the buyer on the intrinsic value of the real estate and the attractive terms of the assumable loan, both of which provide long-term value to the buyer well after this difficult economic cycle runs its course,” Riley added.
In one of the three Los Angeles County deals, Texas and Southern California-based NASA Paramount Centre Enterprises LLC bought a 100% occupied, 15,722-square-foot property at 8859 Alondra Blvd. at the corner of Lakewood and Alondra boulevards in Paramount from Los Angeles-based Topaz Paramount LLC for $7.95 million. Built in 2008, the property is occupied by tenants including a CVS/pharmacy and a Starbucks.
Both the buyer and the seller were represented by Faris Lee managing director Nick Coo, who notes that the deal closed at a 6.6% cap rate, with the buyer assuming a CMBS loan at a 5.76% fixed interest rate, significantly below current market rates. The Faris Lee Capital Group provided advisory on the CMBS loan assumption.
Walter points out that, both in the Paramount sale and in the sale of a property called Burger King Plaza in L.A., Faris Lee managed the transfer of the assumable CMBS loans to the new buyers while at the same time obtaining sale prices exceeding the sellers’ expectations. Besides obtaining below-market financing, the buyers captures favorable non-recourse provisions, he added.
In the Burger King Plaza deal, 1031 Exchange buyer UHL LLC bought the 16,127-square-foot property at 7201-7229 S. Figueroa St. in Los Angeles from Los Angeles-based 7201 South Figueroa LLC for $4.95 million and a cap rate of 6.9%, with Coo representing the seller and Coldwell Banker representing the buyer. The center is a three-building property at the intersection of Figueroa Street and Florence Avenue with tenants including Burger King, ACE Cash Express and neighborhood shops. The CMBS loan that the buyer assumed is at 6.2% fixed for seven years and is amortized over 30 years.
The third Los Angeles County deal was the sale of a 20-acre ground lease at 7250 Carson Blvd. in Long Beach, within the Long Beach Towne Center, on which a 150,000-square-foot Wal-Mart is located. The Long Beach Towne Center, including the Wal-Mart parcel, sits on a 99-year ground lease with the City of Long Beach.
The seller was represented by Walter and Faris Lee senior managing director Donald MacLellan, with the buyer represented by Neil Frumkin and Faris Lee also assisting the buyer in finding financing.
Terms of the deal were not disclosed, but sales records indicate that Santee, CA-based Advantage Asset Acquisitions acquired the ground lease from an affiliate of Phoenix-based Vestar for the full asking price of $5 million.
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