ONTARIO, CA-Three buyers have paid $27.15 million for office,industrial and retail properties in three separate transactionsthat have closed here and in Lake Elsinore in recent weeks in aseries of Inland Empire deals. The properties that changed handsincluded a two-building multi-tenant professional office complextotaling 125,497 square feet at Ontario Gateway, a45,560-square-foot retail building fully occupied by L.A. Fitnessin Lake Elsinore and two industrial and flex buildings totaling129,690 square feet at the Business Park at Belmont in Ontario.

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In the Ontario Gateway sale, the Lee & Associates InvestmentServices Group reports that an investment group bought the twobuildings from Jefferson-Pilot Investments Inc. for $8.75 million.Ontario Gateway "was on the market for just three months and drew15 offers, reflecting the high investor demand,” said EdwardIndvik, vice chairman of Lee ISG. The Lee team, which representedboth the buyer and the seller, included Indvik and Lee ISG foundingprincipal Matthew Sullivan along with senior vice president DavidMudge and associate Julia Corona-Thompson of the Lee &Associates Inland Empire Office Group in Riverside.

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Sullivan noted that the majority of interest received was fromhigh-net-worth individuals as well as off-shore investors. “We werealso able to stabilize the property prior to taking it to market,and that helped our marketing efforts as well,” Sullivan added.

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Ontario Gateway I, at 2151 E. Convention Way, includes 73,974square feet, and Ontario Gateway II, at 2143 E. Convention Way,totals 51,523 square feet. Both buildings are two stories withfreeway orientation. Tenants include SoCal Water, CaliforniaDepartment of Consumer Affairs and the state’s Department of HealthServices and Manpower Inc.

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“We reviewed all of the leases before we took the building outto market, “ Mudge said, “and, once we adjusted rates so that theyfell in line with the market, we were able to stabilize theexisting tenant base and attract several new tenants.”

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In the Lake Elsinore sale, Faris Lee Investments of Irvinereports that the property sold for $8.8 million at a cap rate of8.5%, the lowest for a fitness property in Southern Californiasince 2009, according to Faris Lee. Built in 2007, the center issituated on approximately 4.27 acres and is located at 18550 DexterAve., with full frontage and visibility from Interstate 15 directlyoff the Central Avenue exit.

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Richard Walter, president and Chris Tramontano, director atFaris Lee Investments, represented the seller/developer, AlisoViejo-based California Grand Investments LLC in partnership withLake Fitness LLC. The buyer, a private trust from Villa Park, wasin a 1031 exchange.

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Tramontano said that the cap rate is significant because of theInland Empire location and single-purpose nature of the property."Even when you compare Los Angeles and Orange County markets, it’sstill the lowest rate for a single-tenant fitness facility inSouthern California since 2009,” Tramontano said.

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Walter said that Faris Lee's knowledge of the lendingenvironment indicated that obtaining a loan on the asset would beextremely difficult for a buyer. Before putting the property on themarket, Faris Lee relied on its lender relationships to secure aloan with more favorable terms than anything else available, Waltersaid.

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The totaled $6.1 million at a 6.5% interest rate for aseven-year term. The loan terms were also a factor that allowedFaris Lee to garner an aggressive sale price on the property,Walter said.

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Tramontano added that, in addition to the favorable loan terms,"The property offered the buyer a strong tenant with a 15-year,triple-net lease, and the substantial intrinsic value of theexcellent freeway-adjacent location.” The property, which attractedeight offers, includes an indoor swimming pool and 228 parkingspaces.

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In the Business Park at Belmont sales in Ontario, PanattoniDevelopment Co. sold 1110 S. Mildred Ave., a 101,690-square-footbuilding to Office Master Inc., and 1220 E. Belmont St., anapproximately 28,000-square-foot building, to KeKa LLC, for anaggregate value of $9.6 million. Panattoni was represented by MiloLipson and Roger Rhoades, senior vice presidents, and MichaelArens, associate, all of the Grubb & Ellis Co. IndustrialGroup.

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Lipson said that owner-user sales such as these "have been aprominent trend in the local real estate market and have kept themomentum going for the past 18 months of the downturn." Sincereceiving the listing in December 2008, the team has sold fivefreestanding buildings and three condo units to owner/users, andhas leased one freestanding building.

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The business park, near Ontario International Airport, includessix freestanding industrial buildings that range from 23,665 to101,690 square feet. Additionally, the property includes two flexcondo buildings located at 1115 Grove Ave. and 1175 S. Grove Ave.,of 17,091 and 13,599 square feet of space, respectively. Thebuildings are divided into nine individual units that can be soldor leased.

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