Car Parts Dealer Motors Way to City of Industry

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A car parts distributor has purchased a City of Industry industrial building for $6.59 million, a relatively rare deal in a market dominated by Majestic Realty Co.

The seller in the May 17 transaction was Hager Pacific Properties, a Newport Beach real estate investment firm.

The buyer, Phoenix Aggregate Capital LLC, will move into the 81,250-square-foot building at 20465 Walnut Drive by the end of the month. It had previously leased a 100,000-square-foot building nearby from Majestic, the Industry-based developer owned by billionaire Ed Roski Jr.

Majestic has such a large presence in the San Gabriel Valley city that it is often difficult for other companies to buy industrial space there. As a result, Phoenix Aggregate paid a premium for the property, said broker Adam Dzierzynski, who represented the buyer. The deal breaks down to $81 per square foot.

“The buyer didn’t have a lot of options,” said Dzierzynski, of Lee & Associates. “The price is really pretty high for what the building was.”

However, Rob Neal, managing partner of Hager Pacific, believes the price was fair, noting such buildings were trading for upwards of $125 per square foot before the crash.

The car parts company will use the space for warehousing and distribution, and will build a showroom. Hager Pacific had made some upgrades prior to the sale, including repaving the parking lot and installing a new roof.

The buyer also was represented by Dennis Keane of Lee & Associates. The seller was represented by Jack Cline and Peter Bacci of Lee & Associates, and Kent Stalwick of CB Richard Ellis Group Inc.

Dzierzynski and Keane declined to name the DBA of the buyer, who could not be reached for comment.

Better Mood

Mark Larson’s quarterly poll of commercial real estate investors has been tracking buyers’ sentiment since October 2006. Things were definitely different back then, when the economy was booming, debt was cheap and investors were still buying. Of course, the market has changed.

However, Larson, vice chairman of Lee & Associates in Los Angeles, said the most recent poll shows many investors believe the market is improving, albeit slowly.

Last quarter, 82 percent of the respondents did not think the market had started to strengthen yet. This past quarter, that number was down to 63 percent.

“It’s reflective in the amount of activity we are getting,” he said. “Personally speaking, not only for myself but investment brokers I stay in contact with, the activity has picked up.”

The poll, conducted during the second quarter, received more than 2,300 responses from private investors nationwide. It also found that 14 percent of respondents had closed a transaction in the last four months, up from 12 percent in the first quarter.

It’s worth noting another finding: There was a 20 percent drop in lender-financed transactions from the previous quarter, with 52 percent of transactions reported involving lenders.

Stricter lending requirements and cautious banks have prompted buyers to turn to alternatives, such as all-cash transactions or assumable financing. The poll found that 40 percent of the transactions reported by respondents were all-cash deals.

Bank Building Sale

Selective Real Estate Investments of Encino purchased a Woodland Hills office building, which houses a U.S. Bank branch, for $2.73 million June 9.

The all-cash deal with seller Old Encino Investments LLC, the entity of a family investment group, came after the bank cleared up its lease at the 6537 Topanga Canyon Blvd. property.

The 7,800-square-foot building was home to a Cal National Bank branch until that institution was taken over by regulators in October, said broker Jeff Gray, who represented both parties. The failure stymied efforts to sell the property, which he had been marketing since August with a listing price just north of $3 million.

“It was kind of in limbo on the market,” said Gray, of National Equity Advisors Inc.

U.S. Bank, which acquired the assets of Cal National, kept the branch open and paid rent. But it took until May for U.S. Bank to formally modify and take over the existing lease, which has about five and a half years remaining. U.S. Bank quickly put up signage and several offers were made on the property.

“It made it a more appealing deal,” Gray said. “Now you have U.S. Bank backing the lease.”

Gray said the buyer, a commercial real estate investment firm, did not make the highest offer, but its ability to pay in cash helped it close the deal.

Though the building sold for less than the asking price, Aaron Weiner, the managing member of Old Encino Investments, said he was pleased with the transaction.

“It was a nice, fast sale – very efficient,” he said.

The buyer did not return calls seeking comment.

Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.

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