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SANTA ANA, CA—Alton Deere Plaza, a multi-tenant office park in the Irvine Business Complex here, has been sold to Benchmark Holdings for $32.8 million. The property will be repositioned by the new owners.
CBRE Debt & Structured Finance arranged the joint venture equity and senior debt financing for the acquisition and repositioning of the property. The firm's Shaun Moothart and Bruce Francis arranged the debt and equity funding on behalf of the buyer, while CBRE's Anthony DeLorenzo, Gary Stache, Sean Sullivan, Todd Tydlaska and Ted Snell represented the seller. Moothart and Francis facilitated a five-year floating-rate bridge loan priced in the mid-200s over LIBOR, with interest-only for the entire term of the loan.
GlobeSt.com was unable to determine the seller by deadline.
Moothart tells GlobeSt.com, “The debt and equity markets are flush with capital for assets like Alton Deere with in-place cash flow, below-market rents and the ability to realize the upside with near-term lease maturities. Our platform created significant demand from both the debt and equity markets for this asset, ultimately driving optimal results for both buyer and seller.”
The property, located at 1920-1940 Deere Ave., features six one- and two-story office buildings totaling 185,245 square feet. The project is 96% leased to 21 tenants, including Verizon, XO Communications and American Cancer Society with in-place average rents 28% below market.
According to Moothart, “We have seen increased liquidity in the value-add space particularly with regard to life companies, debt funds and banks, resulting in spread compression, increased flexibility and more competitive loan terms.” CBRE research shows that the lending market in the US remains favorable.
Adds DeLorenzo, “The OC office sector is marked by tremendous demand and can currently be characterized as a landlord market due to the low availability rate. Strong, diversified employment growth in Orange County continues to be the primary driver of the improving fundamentals at this point in the cycle.”
The Greater Airport Area office market in particular continues to be characterized by strong fundamentals with positive net absorption, lack of available space and robust rental rate growth, according to CBRE research. The vacancy rate for low-rise office space recently dropped to a historic low of 8.1% in the Irvine Business Complex. Overall average rents are likely to increase 17.5% over the next three years. The Irvine Business Complex also offers a highly educated labor pool and a multitude of amenities for corporate tenants with 3,000 residential units built or planned within the area in the next two years.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
