Crown West Pays $8M for Lakeview Business Center

The new owner will put $500,000 into upgrades for the 85%-occupied Lakeview Business Center, a 16-year-old complex at 2840-50 S. 36th St. and 2821, 3001 and 3021 S. 35 St. Crown West Realty's asset manager Bob Olshan tells GlobeSt.com that close to $600,000 was shaved from the asking price as a result of repair issues that surfaced during due diligence. Roofs were maintained, but needed to be replaced as did the HVAC system, the bulk of which is as old as the buildings. The seller, Cook Inlet Region of Arizona Inc., owned the asset about 15 years.

The complex, on the market two months, gives the Spokane, WA-based Crown West three properties in a half-mile radius. "We feel fortunate that this property was brought to market when it was," Olshan said in a press release. "It is an ideal addition to our portfolio, offering many of the features we value." Last year, the investment group bought a 103,000-sf headquarters facility at 3402 E. University Dr. and a 39,000-sf garden-style office structure at 3230 E. Broadway Rd.

The newest acquisition has Ninyo & Moore, a regional geotechnical and environmental sciences firm, as the lead tenant on the roster of 16. According to Olshan, the first leases roll in late 2004 and a few more come due in 2005. He says Crown West figures it can lower operating expenses by 60 cents per sf or about 4 cents per sf less than his closest competitor in a business corridor with proximity to the downtown and Sky Harbor International Airport.

Olshan says the acquisition closed with a 10-year loan, with a 25-year amortization from Compass Bank. The acquisition and rehab capital came at rate of Libor plus 200 basis points. The purchase was leveraged by a $100-million pool that Crown West closed in August.

Since it entered the market about two years ago, Crown West has spent about $55 million for four office and flex properties, totaling about 475,000 sf. Olshan confides he's close to placing a fifth contract for seven buildings with 450,000 sf in the Arizona Business Park.

"Phoenix presents an exceptional opportunity for us," Olshan says. "The area continues to grow at a rate above the national average...All indications are that this growth trend will continue." Rick Lee of Lee & Associates Arizona in Phoenix brokered the sale. Pat Harlan and Steve Sayre, a Cushman & Wakefield of Arizona Inc. team, will be doing the leasing for the Crown West-managed complex.