West L.A. Deal Raises Specter of Commercial Slowdown

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A four-story office building in West Los Angeles has traded hands for $33 million, or less than $360 per square foot, a price that reflects the lowering of values due to the credit crunch.

Real estate investment groups Angelo Gordon & Co. LP and Cambra Real Estate purchased the 10780 Santa Monica Blvd. building in a joint venture from Arden Realty Inc. The deal closed at the end of December.

Bob Safai of Madison Partners, who brokered both sides of the deal, said the commercial real estate market is starting to slow down as lenders tighten their purse strings.

Gary Weiss of Madison Partners, who also handled both sides of the deal, added that the buildings Arden sold to Cabi West Coast Acquisitions LLC for about $1.5 billion last summer were priced at an average of $500 per square foot.

“The values are off somewhat in terms of sales by anywhere from 10 to 15 percent and this is in line with that,” said Weiss.

But Safai noted that there was strong interest in the property, with 14 prospective buyers making offers.

“The trick to the deal was there were a lot of bidders that wanted to buy the property and simultaneously the capital markets were melting down and there weren’t a lot of debt providers,” he said.

Though the buyers purchased the property with financing, Angelo Gordon & Co. could have paid all cash, Safai said.

The Class B+, 92,486-square-foot building is 98 percent leased and mostly houses smaller, local businesses. Weiss said that the per-foot-per-month asking rent at the 1984 building is $3.65, on a full-service gross basis.

Safai said that the deal was able to get done during a tumultuous time in the market because Angelo Gordon & Co. has worked with Arden Realty in the past and the two companies share a high level of trust.

Arden Realty is a unit of GE Real Estate, which is a division of General Electric Co.


Norwalk Sale

Meridian Value Partners LLC, a real estate investment firm based in Orange County, has paid $13.8 million for a Norwalk business park.

The deal with seller Seligman Western Enterprises Ltd., a San Francisco-based private real estate owner and unit of Seligman and Associates Inc., closed Nov. 15. The property was put on the market in August.

The 105,442-square-foot business park at 14717-14799 Carmenita Road includes a mix of retail, office and industrial tenants. At the time of the closing, the center, called the Carmenita Square Business Park, was 90 percent leased.

“What was attractive was that the buyer felt that if they did a complete rehab of the property they thought they could bring it to a new level and increase rents,” said Robert Socci of Voit Commercial Brokerage.

Socci said that Meridian Value Partners has already started to work on the property, first with interior renovations. The remodel will include new signage, landscaping and fresh paint. Socci, who represented both sides of the deal, said that the renovation should be complete in 90 days.

The deal breaks down to $130.40 per square foot for the building. “It was a market rate deal,” Socci said. “These business parks are extremely hard to find and it’s a main street right off of the Golden State (5) Freeway.”

Socci said that real estate developers no longer deliver such business parks because “they are too expensive to build.”

“There are multiple entrances, multiple restrooms, multiple this, multiple that, and the construction costs are just too high,” Socci said.

Louis Tomaselli and Mitch Zehner of Voit also represented both sides of the deal.


Industrial Deal

The industrial market in the City of Industry remains strong despite downturns in other submarkets. Case in point: Environ-Con LLC, a Saint Cloud, Minn., recycler of electronic components, has purchased a 128,228-square-foot building there for $12.3 million.

The terms with seller First Industrial LP, a Chicago-based REIT, were set in 2006 when Environ-Con signed a lease with First Industrial that included an option to purchase the property. The deal closed Dec. 20.

The $12.3 million price for the 333 Turnbull Canyon Road building breaks down to $95.92 per square foot. The broker on the deal said that if the property had been put on the open market in the current climate, it wouldn’t have sold for much more.

“The deal is slightly below market today. The industrial sector in the City of Industry is really strong,” said Jim Center of Grubb & Ellis Co., who represented the seller in the deal.

The industrial vacancy rate in the San Gabriel Valley was 1.2 percent in the fourth quarter, down from 1.9 percent in the third quarter, according to Grubb & Ellis.

Environ-Con had wanted to buy the building in 2006, but First Industrial held the property in a fund with a clause that dictated that the REIT couldn’t sell the property for four years. First Industrial purchased the building in 2003.

Bob Dipre of GVA Daum represented the buyer.


Staff reporter Daniel Miller can be reached at

[email protected]

or (323) 549-5225, ext. 263.

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