LOS ANGELES—An unnamed investor has purchased Tudor Plaza from East Hills Rialto LLC for $13.4 million, GlobeSt.com reports exclusively. Despite a CMBS loan that needed to be defeased, the sellers received 10 offers for the property, which eventually sold for $400,000 above the asking price.

“We only had a two-week window to defease the loan before the closing,” Matthew Sullivan, managing director and partner at Lee & Associates Investment Services Group, tells GlobeSt.com. “Had the property been free of this unfavorable financing, we would have gotten even more offers.” The CMBS loan carried a substantial defeasency penalty and a 5.6% interest rate.

The 34,385-square-foot retail center has 12 units, and is 100% leased to a tenant mix that includes Walgreens, El Pollo Loco, Wendy's, Little Caesars and Sprint. The sellers have owned the property since it was built in 2006. “The market is strong, and there aren't a lot of retail properties on the market. Other sellers have had a lot of success selling properties very similar to this one with really low cap rates,” says Sullivan about the seller's reason to dispose of the property. “Also, the sellers are getting older and want to spend more time with their families, so this was a good time for them to sell and a good time in the market.”

The buyer beat out 10 offers from 1031 exchange buyers and offshore investors to purchase the property as the upleg in a 1031 transaction. The sale likely generated such a high level of interest because it has outperformed nearby centers, according to Sullivan, maintaining strong occupancies with credit tenants. Sullivan also notes that the center is on a prominent corner, which has contributed to its success. “East Hills Rialto has not lost any of their tenants in 10 years, which speaks to how strong this shopping center has been in the market,” he says.” The sale had a 6% cap rate.

Investors are beginning to eye retail assets, particularly needs-based retail assets, according to Chris Macke of American Realty Advisors, because they offer the best potential for a return. Macke made the statement in a recent Q&A with his American Realty Advisors colleague Jay Butterfield.