Empty Office Building Gets $25M in Financing

GLENDALE, CA-Mesa West Capital of Los Angeles has funded a $24.5 million first mortgage loan for a newly built, 188,000-square-foot empty spec office building at 207 Goode Ave. Prospects for the building are pretty good, according to Mesa West, which provided the mortgage for a joint venture of Morgan Stanley Real Estate Investing and Lincoln Property Co. that bought the building last year in a short sale.

Principal Steve Fried of Mesa West noted that the new ownership is already in discussions with a number of potential tenants for the building, which was developed by L.A.-based MPG Office Trust. "At the cost basis at which the building was acquired, the new owners should be well positioned to benefit from a flight to quality in that market," Fried said. He pointed out that the owners acquired the building at a significant discount to replacement cost in the October 2010 short sale.

The eight-story building is one of the newest buildings in the Tri-Cities submarket, which consists of Glendale, Burbank and Pasadena. Designed by AECOM, the fiber-reinforced white concrete and mirrored glass building is LEED certified and features a column-free floor plan.

Fried says the loan on 207 Goode conforms to Mesa West's lending platform of "financing high quality, well located transitional assets with strong sponsorship." The L.A.-based firm is a privately held portfolio lender with a capital base of more than $2 billion.

MPG received proceeds of $22.8 million from the sale of 207 Goode, which the L.A.-based REIT disposed of in 2010 in an effort to reduce its debt, according to public filings by MPG. The REIT applied $21.6 million from the sale of 207 Goode to partially repay the $38.2 million construction loan on the property and was relieved of the obligation to repay the remaining $16.6 million.

The 207 Goode building was one of seven assets totaling 2.1 million square feet of office space and 100,000 square feet of retail space that MPG disposed of in 2010 to eliminate $647.5 million of debt and $20.4 million in principal repayment and/or service guaranties on debt maturing in the next several years.