Vacant Condos Trade in Short Sale, Buyer to Lease Units

LOS ANGELES COUNTY

Oxy Lofts

EAGLE ROCK, CA-The newly built Oxy Lofts condominiums at 4547-4555 Eagle Rock Blvd. have traded in a lender-assisted short sale in this week's roundup of commercial real estate news in the West. Marcus & Millichap executive vice president Ron Harris and associate director Paul Darrow in the company's Downtown L.A. office, who represented both the buyer and the seller, tell GlobeSt.com that the buyer paid $8.6 million in the all-cash transaction. Harris and Darrow point out that the property, which includes 32 residential units and one commercial space, features loft and townhome style floorplans designed by architect Jay Vanos to appeal to young professionals who have begun moving eastward to Eagle Rock from areas like Silverake and Los Feliz. “Although the units were individually parceled for condominiums, the buyer will lease the apartments and consider selling the units as condos in a future market cycle," Harris said. Darrow noted that, "This is the second transaction that Eagle Rock has seen this quarter in which an institutionally profiled buyer purchased a site from a local developer. While Eagle Rock remains less established than other parts of Los Angeles, its long term potential has begun drawing outside capital seeking to invest in emerging in-fill markets." Due to timing constraints, the developers opted to forgo individual sales and dispose of the asset on a bulk-sale basis, and the property attracted multiple offers from local and regional investment groups. Harris and Darrow say one of the reasons that the property generated so much investor interest is that it "represented an opportunity to capitalize on Los Angeles' already rebounding rental market or pursuse an immediate sell-out of the individual units." The units "feature innovative loft and townhome style floorplans" that can be expected to yield "significant price premiums over the homegenous product that is generally available in the Los Angeles housing market," the Marcus & Millichap team says. The buyer was PEI Asset Pool VI LLC, an opportunistic fund based in San Diego. The seller was a local private developer.

Furniture and home furnishings retailer West Elm has signed a 15-year, $6.5 million lease for 10,909 square feet of retail space at 8366 Beverly Blvd. in Los Angeles for a new location. West Elm, a division of Williams Sonoma, is slated to open by the end of 2011. The retailer signed the lease with building owner Brand Art LLC, which was represented by David Ickovics and David Aschkenasy of Commercial Asset Group. West Elm was represented by Epsteen & Associates. The landlord has also retained CAG to provide property management services for the building.

Sky High Sports has acquired a 34,321-square-foot industrial building at 6033 De Soto Ave. in Woodland Hills from a private seller for approxmately $5.35 million. The buyer was represented by senior EVP John DeGrinis, associate VP Patrick DuRoss and senior associate Jeff Abraham of Team DeGrinis, based in Colliers International’s Encino office. Jim McDonald of Group 100 represented the seller. Sky High, a trampoline fun center, bought the property for an expansion, according to DuRoss. “Sky High found tremendous success in the building we leased them in Camarillo in 2010,” said DuRoss. “For their expansion into the San Fernando Valley, we looked at several alternatives that just weren’t the right fit. But when we saw this building, we thought it was the ideal location for Sky High.” DeGrinis added, “This transaction also took some creativity in putting the deal together. We ended up structuring the purchase with the seller carrying back the note, which helped accomplish both parties’ goals.”

Musicians Institute Inc. bought a 5,612-square-foot, single-story office building on 13,000 square feet of land at 1536 N. Highland Ave. in Los Angeles from Mher and Sossy Tavidian of Vartan Tavidian for $3 million. The sellers were represented by SVO Kathleen Silver and associate Kay Thorpe in the West Los Angeles office of Colliers International. The buyer was represented by Ramsey-Shilling Commercial Real Estate Services Inc.

Trucking company So Cal Carriers Inc. has acquired 110,000 square feet of land at 6403 E. Slauson Ave. in the City of Commerce for $2.7 million at one of the highest sale prices for land in the Commerce market in the past two years, according to SVP Brian McLoughlin in the Commerce office of Voit Real Estate Services. McLoughlin, along with David Fults, also an SVP in Voit’s Commerce office, represented the seller, Maechling Family Trust. So Cal Carriers will use the land as its new Commerce headquarters in a relocation from the City of Industry. McLoughlin notes that a 36,123 square-foot warehouse is situated on the land, and the buyer plans to use a portion of that building and demo the rest. The buyer was represented by Casey Mungo of Daum Commercial Real Estate Services.

ORANGE COUNTY

Bristol Place

The owner of the 63,000-square-foot Bristol Place retail center at 3370-3398 S. Bristol St. in Santa Ana has secured a $15.5 million senior loan to refinance the maturing loan on the center. The loan was arranged by a George Smith Partners team including principal and managing director Gary Mozer, SVPs Steve Orchard and Josh Roseman, and VP Michelle Lee. Bristol Place is a 75%-occupied, Target shadow-anchored center for which the client required a 75% LTV loan for the refinancing. “The primary challenge of the deal,” explained Roseman, “was the tenant base as 67% of the leases rolled in three years, and several of the tenants were delinquent on their rents.” With the property only demonstrating break-even debt coverage and with a high ($250) loan per square foot, the transaction fell beyond the comfort level of many capital providers. In order to get the deal closed, Roseman says, GSP highlighted and supported the strengths of the deal, which included "an experienced, retail-focused sponsor, strong historical performance by the shadow anchor, an infill location in a major retail corridor and significant leasing velocity.” The financing was secured on a non-recourse basis, floating at LIBOR plus 375 basis points with a 7.75% floor, interest-only for the full term. The term is three years with two one-year options, and is locked out for 12 months with an open prepay thereafter.

SAN DIEGO COUNTY

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