BALDWIN PARK, CA—A 24,262-square-foot retailproperty has appreciated 25% in the three years due to theimproving market. Gershman Properties purchasedthe 13-tenant site three years ago for $9.7 million, and has soldthe property to Baldwin Park Plaza 11 for $12.7million.

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“This property was one of the most in demand properties in termsof total inquiries of all of the properties that we have listedthis year,” Rick Chichester, president and CEO ofFaris Lee Investments, tells GlobeSt.com.Chichester represented the seller in the transaction along with hisFaris Lee Investments colleagues Matt Mousavi andTom Chichester. Newmark Grubb KnightFrank represented the buyer in the transaction.

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The seller's team received north of 140 inquiries on theproperty. In the end, they received six total offers, and choseBaldwin Park Plaza 11 because they were completing a 1031exchange that perfectly aligned with the purchase. “Itreally was an ideal situation for both the buyer and the seller.The buyer is a very sophisticated well-known real estate investorthat knew the asset extremely well,” says Chichester. “In terms ofthe deal structure, the buyer was in a 1031 exchange and the termsmatched up ideally with the ownership's structure on debt andequity. The seller want to assume the existing debt because itmatched their exchange debt, and the equity they brought to thetransaction also matched their exchange equity requirement. It wasalmost a perfectly aligned transaction. We have experienced thisbefore, but not often. To get the debt and equity structure on boththe buyer and the seller sides to match up is rare.”

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Chichester and his team counseled the seller to sell theproperty based on the market conditions and the strength of thereal estate. They decided to take the property to the marketunpriced. “We originally told them a price that was lower than theprice we were able to achieve and that is because we included thefact that we thought it would be unlikely that we would findsomeone willing to assume the debt. The reality is that theexpectations for the seller were far exceeded.” he explains. Theclosing cap rate was 5.9%.

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Located at 14510 Baldwin Park Towne Center in Baldwin Hills, CA,the retail property sits on 1.12 acres and is 100% leased to 13tenants, including Verizon,AT&T, Gamestop andFantastic Sams. “This is an extremely dense infillLos Angeles location. It is right off the 10 Freeway and you cansee the property from the 10 Freeway, so it has exceptionalidentity,” says Chichester. “The location, the proximity to thefreeway and the fact that it is Los Angeles creates a verycompelling investment opportunity.” Some of these leases expire inthe near future, but Chichester explains that the property has agood historical occupancy, and tenants are likely to remain at theproperty. The property is part of the larger Baldwin ParkTowne Center, a larger regional retail development that isanchored by Home Depot along with other nationaltenants that include McDonald's,Denny's, Starbucks andMarriott Courtyard Hotel.

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“The commercial real estate investment market is very robustnow, and I think it bodes well too for the strength of the SouthernCalifornia market,” says Chichester, who is an expert on the retailmarket and recently lent his expertise at the annual ICSC WesternDivision Conference. “In terms of retail, I think thisshows extremely well in what values you can achieve forwell-located and well-positioned retail properties, and the levelof stability it can bring to an investor.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.