Paul Brindley and Mark Gibson of Holliday Fenoglio say the borrower, a RREEF client that recently acquired the property from an affiliate of Culver City-based Fujita Corp. USA, obtained the fixed-rate, 10-year loan through Aetna Insurance. The building occupies 2.85 acres and is 100% leased to Federal Express, International Rectifier and Japan Airlines.
Brindley says Holliday Fenoglio marketed the loan to portfolio lenders who were more focused on the quality of tenancy, the attractive loan per sf, the long-term prospects of the market and the strength of the sponsor rather than the current weakness of the El Segundo office market.
The El Segundo office market has softened considerably in recent years, along with the rest of the region's submarkets. Vacancies there were below 10% in the late 1990s and early 2000, but in the overall South Bay market that El Segundo is part of, direct vacancy is about 17% and overall vacancy is about 19%, according to brokerage reports. Brokers say that while some properties--like the 101 N. Sepulveda building--maintain high occupancies, others in El Segundo sit with large blocks of empty space.
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