TUSTIN, CA—Transwestern has arranged equity and debt financing for the acquisition and repositioning of a 39,762-square-foot flex research and development facility located at 14201 Franklin Ave. The redevelopment is scheduled for completion early in 2016. Transwestern's Robert Murphy, Gary Limjuco and Steven Orchard organized the financing on behalf of Harbor Associates, LLC.
Transwestern sourced equity from a new discretionary fund representing several private investors. The non-recourse debt included a 60% loan-to-value ratio, a 3.5% interest-only rate and a four-year term. The financing structure exploits shifting dynamics to create above-market returns with a stabilized 8.3% yield on cost.
“Harbor saw potential in this asset that others missed because it requires a significant amount of due diligence,” said Murphy. “Harbor focuses on mid-sized, class B or better office repositioning opportunities in Southern California, and this asset presented an attractive opportunity at a favorable price.”
The two-story, concrete tilt-up structure sits on 2.3 acres, half of which is vacant land that will be converted into outdoor amenities and additional parking to create the highest parking ratio among the building's competitive set. Additional improvements will include a new lobby, atriums, natural lighting, polished concrete floors and 14-foot exposed wood ceilings. The office redesign will cater to tenants seeking creative spaces, which are in high demand in Orange County.
“There is a significant supply and demand imbalance for creative space in Orange County, and owners of creative projects have seen incredible success, achieving rental premiums of 20% above traditional office rents,” said Justin Loiacono, principal at Harbor Associates. “The Transwestern team presented us with a variety of capital solutions from both institutions and family offices, ultimately sourcing a partner that believed in our new platform and business plan for this asset.”
14201 Franklin Ave. is located within 1 mile of Interstate 5, the 261 Toll Road and Jamboree Road, providing easy access throughout Orange County and Southern California. The property is also in close proximity to the Tustin Marketplace, a 1.6 million-square-foot outdoor shopping mall, and the 1 million-square-foot District at Tustin Legacy shopping mall.
Transwestern is a privately held real estate firm specializing in agency leasing, management, tenant advisory, capital markets, research and sustainability services.
The principals of Harbor have over 25 years of experience in Southern California and have closed $1.5B in acquisitions and asset managed over $2.5B in assets including over 3M SF of office. Harbor is a JV with the Bascom Group.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
