Two large property sales have occurred recently that have included debt assumption by the buyers, highlighting an emerging trend in the local real estate market. As financing becomes more difficult to obtain, some buyers are assuming in-place debt on property, says Kevin Shannon, a broker for CB Richard Ellis Group Inc., who handled two recent deals in Torrance and Culver City.
"Having existing debt in sales is an advantage in this current market," said Shannon, who added that the debt markets are showing signs of improvement in recent weeks. "If you are having trouble getting loans, (an existing loan) has a more favorable interest rate and it's already done."
In one debt assumption deal, El Segundo-based Continental Development Corp. paid $20.9 million for two adjacent medical office buildings in Torrance. In the other deal, an unidentified foreign investor from Mexico paid $29.5 million for a Culver City office building. Both deals closed in April.
Continental Development, an office developer and owner, purchased the two buildings from WRA Property Management Inc., the entity of a Newport Beach-based real estate investor. The buildings at 3500 Lomita Blvd. and 23560 Madison St. are near Torrance Memorial Medical Center. The Lomita building has 35,348 square feet and the Madison building has 40,580 square feet.
In the deal, the buyer assumed approximately $13.3 million in existing debt from the seller's Washington Mutual loan.
In the Culver City deal, the buyer purchased the 111,067-square-foot office building at 5901 Deep Valley Circle from Santa Barbara-based Pacifica Real Estate Group. The property sits on about 5.5 acres. Pacifica bought the building three years ago for $22.4 million. The building is 100 percent occupied. In that deal, the buyer assumed approximately $14.8 million in existing debt from Pacifica's Allstate Insurance loan.
Michael Moore, Dave Smith and Tim Vaughan of CB Richard Ellis also represented both sides of the medical office deal. Moore and Stan Gerlach of CB Richard Ellis also handled the seller side in the Culver City deal and Jeff Pion of CB Richard Ellis handled the buyer side.
Culver City Deal
The forthcoming Plaza at Culver Studios, a three-story, mixed-use project in downtown Culver City, has signed a prominent retail tenant.
Minneapolis-based Room & Board Inc., a furniture retailer, has signed a deal for 40,000 square feet at the three-story project, which is currently under construction. The 15-year deal is valued at about $30 million and closed April 1.
For reprint and licensing requests for this article, CLICK HERE.