SANTA FE SPRINGS, CA-Argus Realty Investors of San Juan Capistrano hasacquired the 23-building, 720,301-sf Heritage Corporate Center for $52.6million from a partnership of Morgan Stanley Real Estate Fund IV and theKearny Real Estate Co. of Los Angeles in what the seller says is one of the largest property sales in the mid-counties region this year.

The property occupies a prime location near the junction of the 605 and 5freeways and is a class A development with a roster of tenantsincluding the County of Los Angeles, Sears, State Farm, Wells Fargo and morethan 95 other occupants. Heritage Park is so named because it surrounds afive-acre historical park, botanical gardens and train museum that ismaintained by the City of Santa Fe Springs.

Argus acquired a 54-year leasehold interest in the 45-acre, 720,301-sfmixed-use business park, which sits on land owned by the city. The business park, which is at the intersection of Telegraph Roadand Norwalk Boulevard, was 90% leased at closing with an additional leasein final negotiation that will increase overall occupancy to 94%. Thelargest tenant, the County of Los Angeles, recently negotiated a new leasefor 45,290 sf and extended an existing 65,568-sf lease. Just before thesale, which was a direct deal between the buyer and the seller, Pull-RHoldings signed a new lease on a 49,142-sf warehouse.

CEO Dick Gee of Argus says the company was attracted to the property by itsprime location and strong, diversified tenant base. Kearny-Morgan Stanleyhas invested more than $3 million into the center over the last 17 months andleased more than 320,000 sf of new and renewal space in the project, whichincludes 16 industrial, four R&D and three commercial office buildings.

Hoonie Kang, project manager for Kearny, says the seller initially wantedto dispose of only six of the 23 buildings, but Argus was only interestedin acquiring the entire center. According to Jean Murphy, Argus’ SVPof acquisitions, who spearheaded the purchase, Argus knew that Kearnywanted to sell the entire center the following year, so it structured atransaction that met the seller’s financial objectives today. The financingwas arranged by Brian Eisner, a partner with George Elkins Mortgage BankingCo. in Los Angeles, who calls the property a trophy asset and says thatmany lenders were interested in handling the financing for Argus. Eisnerarranged a five-year fixed rate, non-recourse loan at 5.09%, amortized over30 years, with Principal Global Investors of Des Moines, working incooperation with Randie Tayner, investment director-mortgages withPrincipal.

Heritage’s original leasing broker, John Biven of CB Richard Ellis has beenrepresenting the property for 17 years and will continue to be the leasingagent. Argus has retained Kearny to continue as property manager and itwill maintain an office on site.

Argus Realty Investors LP specializes in acquiring both stabilized andvalue-added industrial and low-rise office buildings in core growth marketsfor individual and institutional investors including the Maxwell Dreverfamily. Argus also considers opportune investments nationwide in the $15-million to $100-million-plus range.

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