Industrial Trust Buys 300,000 SF for $24M

Victorville CVS

Riverside, CA-based 14426 Palmdale Road LLC bought a 12,900-square-foot property occupied by CVS Pharmacy at 14426 Palmdale Rd. in Victorville from Los Angeles-based NMC El Evado LLC for $7.95 million at a cap rate of 6.5% in a 1031 exchange. Hamid Soroudi and Kimberly Roberts Stepp of Charles Dunn Co. represented the buyer; Nick Coo and Dennis Vaccaro of Faris Lee Investments represented the seller. Soroudi said that the buyer had sold a multifamily property at a 4% cap rate and “was happy to acquire a 6.5% cap rate replacement property with no management involvement.” Coo and Vaccaro noted that the sale set a record of $616 per square foot, which is the highest price for a single-tenant drug store building in the Inland Empire since 2007. Said Vaccaro, “This sale is significant because it proves that there is a high level of interest in acquiring quality assets with a credit tenant on a long term lease. The interest in this transaction was strong despite the fact that the CVS lease is flat for the entire 25-year initial lease term.”

LOS ANGELES COUNTY

604 Arizona Ave.

Los Angeles-based REIT Hudson Pacific Properties has acquired a 44,000-square-foot office building at 604 Arizona Ave. in Santa Monica for $21.5 million, according to a public filing by the REIT. The building is fully leased to Google Inc. through July 31, 2012, according to the Hudson Pacific filing. Both the buyer and the seller were represented by the West Los Angeles office of Lee & Associates, with David Wilson representing Hudson Pacific Properties and Andrew Wilson representing seller Noncom Properties.

A private partnership has placed a 124,966 square-foot, 2.86-acre development site at 2668 Santa Anita Ave. in the San Gabriel Valley City of El Monte on the market at an asking price of $7.5 million and has named Daniel Withers and Lonnie McDermott, investment specialists in Marcus & Millichap’s Encino office, as the listing agents. “A savvy investor or developer has the opportunity to transform this land into a mixed-use project with multiple uses, or a quality affordable housing project,” says Withers. McDermott points out that the City of El Monte “has identified an absolute need for new multifamily housing development as well as retail designed to serve this urban corridor. As a result of the city’s pro-development stance, it will work diligently with any investor or developer to make an innovative urban infill project come to fruition.” The site that is being marketed is occupied by two apartment buildings, built in 1963, commercial uses and a single-family residence. The commercial real estate is approximately 60% vacant and generates about $175,000 annually.

Terrenno Realty Corp. bought two logistics properties in the South Bay submarket of Los Angeles from two different sellers for $16.5 million, according to SVP Sean O'Donnell in the Industrial Group at Grubb & Ellis Co. One property was an approximately 72,800-square-foot facility at 19601 Hamilton Ave. in Torrance that Terrenno bought from an undisclosed seller for $12.4 million. The two-story industrial building is situated on more than five acres and is net leased and fully occupied by FedEx Trade Networks. In conjunction with Jeff Smart of Colliers International, O'Donnell represented both parties in the sale. O'Donnell also collaborated with Yasushi Shiromi, vice president, Industrial Group, in representing both parties in Terrenno Realty's purchase of 630 S. Glasgow Ave., an approximately 30,000-square-foot building in Inglewood, from an undisclosed seller for $4.1 million. The warehouse facility with second-story office space is situated on 1.5 acres and is fully leased to EZ Mailing Inc.

Economic and Planning Systems, an urban economics consulting firm, is opening an office in Downtown Los Angeles. EPS also has forged a strategic alliance with Allan D. Kotin & Associates and its founder and principal, Allan D. Kotin. The two firms will share offices but will operate as independent organizations. James R. Musbach, managing principal of EPS, says the firm has an active and ongoing practice in Southern California that it can better serve with a permanent base here. The company has offices in Berkeley, CA Sacramento and Denver, with a team of 35 consultants throughout the US and abroad. The EPS L.A. office will be staffed by newly hired VP Andrew Kaplan.

Internet service provider Cogent Communications has signed a lease for 48,627 square feet of data center and office space at 2947 Bradley St. in the Eaton Canyon Tech Center in Pasadena. Cogent was represented by Transwestern’s Jonathan Larsen. Also involved was Transwestern’s Scott Becker. Representing the landlord was Patrick Lacey of PMA Commercial. The space previously was occupied by Earthlink and therefore had the right infrastructure for Cogent’s West Coast data center, Larsen said.

Irvine, CA-based Premier Business Centers has opened a new location in the Wells Fargo Center, also known as KPMG Tower, at 355 S. Grand Ave. in Downtown Los Angeles. The new executive suite has 13,462 rentable square feet on the 24th floor. The space is Premier’s 21st new office center in just over two years, notes Jeff Reinstein, CEO of Premier.

ORANGE COUNTY

Los Angeles-based Rexford Industrial has acquired a fully leased 122,000-square-foot industrial building at 3441 W. MacArthur Blvd. in Santa Ana for $8.5 million on an all-cash basis through the firm’s Rexford Industrial Fund V REIT. According to Howard Schwimmer, Rexford co-founder and senior managing partner, the company’s “ability to move quickly and close the acquisition in 30 days with Rexford’s proprietary investment fund was a decided advantage in the transaction.” Wade Tift of Grubb & Ellis Co. represented Rexford; Bucky Gillett and Kirstin Emershaw of Gillett Commercial Real Estate represented the seller. Michael Frankel, Rexford’s managing partner, said that Rexford’s ability to provide the seller with a customized sale-leaseback solution also was key to the deal.

Pacific Medical Buildings of San Diego has named Grubb & Ellis Co.’s Healthcare Properties Group to lease the future Shady Creek Medical Center, a 150,000-square-foot, four-building project at the intersection of Sand Canyon and Alton Parkway in Irvine that is scheduled for completion in 2013. The Grubb & Ellis team will include SVP Garth Hogan, the group’s director, along with associate VP David Kluver and associate John Scruggs. The new center will include three two-story medical office buildings, each comprising 50,000 square feet, and a 7,200-square-foot building designed for retail and commercial uses. The property will offer a parking ratio of five spaces per 1,000 square feet.

SAN DIEGO COUNTY

SR Commercial, a commercial real estate investment and management company, has secured four new commercial management contracts totaling more than 185,470 square feet in Southern California. The four contracts include a 61,000 square-foot class A office building in Scripps Ranch, the former Thomas Jefferson Law School Campus, a freestanding industrial building in Santa Fe Springs and a multi-tenant office building located in the heart of Cardiff-by-The-Sea in San Diego. SR Commercial principal Adam S. Robinson says that the company is “embarking on a rapid growth campaign in commercial management.” He notes that the firm recently rebranded in order to focus on investment and management in the commercial market. It will also continue to handle homeowner association management for the residential sector with its sister company, ARK Management.

NORTHERN CALIFORNIA

The buyer of a 96-unit broken condominium project has secured a $9.5 million loan to finance a discounted payoff of the project, according to principal and managing director Gary E. Mozer of Los Angeles-based George Smith Partners, who arranged the financing with assistance from SVP Josh Roseman and VP Michelle Lee. The floating rate loan closed with an interest rate of LIBOR plus 2.5% for three years with two one-year options. The loan was then swapped to three-year fixed at 3.76%. Mozer said that the property historically operated at above 95% occupancy as an apartment complex, but cash flow suffered and the condo conversion stalled in mid-2010, “ultimately causing our client to decide to convert the property back to apartments.,” Mozer explained that the loan provided various challenges for the borrower, including in-place net operating income that did not justify the required loan amount. In addition, the previous operator was a condo converter, not experienced in managing rental units. Last, the lender required that the discounted payoff close by a fixed date, “putting pressure on our client to close the loan in a timely manner.” Lee added that, once the borrower brought in a new management company, “We were then able to analyze the historical operating expenses to cull-out non-recurring and capital expenditures that were attributable to the prior operator’s focus on condo sales rather than traditional multifamily operations.” Lee explained. “Given the hard close date required by the lender, we recommended the client borrow from a regional bank with proven execution ability. We then worked with the lender to explain all the historical variances and were able to close the transaction on-time and as applied for.”

Westcore Properties of San Diego has acquired 1380 North MacArthur Dr., a 206,451-square-foot multi-tenant warehouse distribution facility in Tracy, for $8.3 million. Almost simultaneously, the company brought the class A building to fully leased status with an approximate 64,000-square-foot lease expansion and renewal by TIN Inc., dba Temple Inland. With the expansion, Temple Inland now occupies 128,000 square feet in the project. Neil Johnson, principal of acquisitions with Westcore Properties' Northern California office, pointed out that the property offers San Joaquin’s closest location to the Oakland Port along with numerous class A features that make it highly desirable for distribution companies such as Temple Inland. In the purchase of 1380 North MacArthur Dr., Blake Rasmussen and Kevin Dal Porto of CB Richard Ellis represented both Westcore Properties and the sellers, Mark O’Brien and Tim O’Brien. In the lease transaction, Westcore Properties and Temple Inland represented themselves.

Nova Solar Technologies Inc. signed a long-term lease for an approximately 64,596-square-foot R&D/flex building at 48664 Milmont Dr. in Fremont. Grubb & Ellis Co. associate Kevin Klink and SVP Jeff Rohn of the firm’s Clean Energy Group represented Nova Solar, which is headquartered in Hong Kong and specializes in the design of solar panel production equipment, the production of thin-film silicon solar panels and the installation of large-scale solar power plants. The company has a large solar panel manufacturing facility in China and will use the space located at 48664 Milmont Dr. as its US center for sales, research and development. Sherman Chan and Vince Machado of CB Richard Ellis represented the owner of the property, Arden Realty.