Bantry-Guggenheim JV Buys $49M Biz Park

The portfolio includes a 90,734-sf, six-story building at 5950 Canoga Ave., a 53,283-sf, two-story atrium building at 5955 DeSoto Ave. and a 35,646-sf single-story building located at 21155 Califa Ave. With the exception of 1,200 sf available for lease at 5955 DeSoto, all of the buildings are fully leased.

The business park is occupied by a national tenant mix that includes Texas Instruments, Avnet Inc., Zenith Insurance and the University of Phoenix, among others. Leonard notes that a benefit offered by each building is free parking in a market that generally charges for parking.

According to Leonard, the seller put the 5950 property on the market in 2006, with Leonard as the listing agent. Bantry Holdings and Guggenheim Real Estate were among several bidders who made offers to purchase the building at that time, but the seller withdrew the property without accepting any of the bids.

As the financial markets began to change earlier this year, Bantry and Guggenheim presented a new, unsolicited offer to buy not only the 5950 Canoga Ave. building that had been on the market previously, but also the other two buildings in the portfolio. Schaub accepted the offer in April but the deal did not close until recently, a transition period much longer than customary, to allow Schaub time to identify an upleg for a 1031 exchange.

Leonard points out that the buyers' acquisition of the portfolio included "assuming an existing conduit note at the buyers' expense as well as paying the prepayment penalties involved with existing debt that could not be assumed." The buyer had to secure new financing at a difficult time as a result of a tightening in the credit markets, Leonard adds.

Fortunately, Bantry/Guggenheim enjoys strong relationships in the financial market and, in particular, with conduit financing, Leonard says. This allowed Bantry/Guggenheim to secure the needed financing and close on the transaction, the Lee & Associates principal points out.

Leonard observes that the transaction reflects the current market and the difficulty buyers are having in securing prime office property for sale. He calls the complex transaction, "a monumental deal this year for its size and the complications involved."

Bantry/Guggenheim's new assets are part of a Woodland Hills/Warner Center office market that totals more than 10 million sf, where vacancies stood at 8.9% as of the third quarter. Vacancies in the area have edged up slightly since last year, largely because it houses a number of mortgage-related companies.

Warner Center is entirely built out and, with continued movement of businesses to the western edges of Los Angeles County, the submarket has become a corporate hub for the region. That status as an important hub is reflected in the rising rental rates in the area, which currently average $2.61 per sf per month, up from $2.45 per sf per month at the end of 2006.