El Segundo Office Property Trades at Premium

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A fund formed by San Francisco real estate investment firm Roxborough Group and Santa Monica investment firm Montana Avenue Capital Partners has reeled in a big one.

The fund bought a 119,600-square-foot Class A office building at 1700 E. Walnut Ave. in El Segundo for $33.5 million in a deal that closed last week. The firms paid $280 a square foot to the seller, USAA Real Estate of San Antonio.

The square-foot price was $10 steeper than average for the area, according to data from CoStar Group Inc.

Roxborough was drawn to the property because of the growing demand from tech and media companies in El Segundo, said Marc Perrin, the firm’s managing partner.

Montana Avenue was attracted to its value relative to the Silicon Beach market, and to a separate six-story parking structure that came in the deal, said Steve Elson, a Montana Avenue vice president.

The six-story office property is 99 percent leased by tenants that include tablet maker Fuhu and tech research firm iSuppli. USAA planned to sell the property once it was leased up, and chose now because of a favorable capital market, said Kevin Shannon of CBRE Group Inc., who represented the seller along with Ken White and Mike Moore. The buyer was represented internally.

The new co-owners plan to reposition the property by redesigning its common areas and amenities, among other creative office touchstones.

Montana Avenue has a track record of creative conversions in the submarket, including the Landing at 2040 Mariposa Ave. and the Station at 2201 E. El Segundo Blvd. It sold the Station in June to AGI Properties Inc. in Willow Street, Penn., for $31 million, almost three times what it paid when it acquired the property last year.

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