Thank you for sharing!

Your article was successfully shared with the contacts you provided.

MISSION VIEJO, CA-The acquisition of three single-tenant properties totaling 24,250 square feet at Trabuco Hills Shopping Center has partially fulfilled a 1031 exchange for the buyer and included an assumable loan at 5.7%, with Faris Lee Investments representing the seller and Marcus & Millichap representing the buyer. According to Scott Hook, first vice president of investments and a senior director of the Marcus & Millichap National Retail Group in Newport Beach, the buyer paid $14.4 million for the three single-tenant buildings, which are pad sites to the Trabuco Hills Center.

The pad sites are located in Mission Viejo at 27785, 27845 and 27865 Santa Margarita Parkway, at the northwestern corner of Santa Margarita and Marguerite parkways. Tenants at the sites are Walgreens, Ramona Tire and Claim Jumper. The sites are a part of Trabuco Hills Shopping Center, Mission Viejo’s premier neighborhood shopping center.

The $14.4 million sales price, or $594 per square foot, closed at a cap rate of 6.21%. Hook notes that the loan on the properties was one of the selling points of the deal. The terms of the loan, in addition its attractive 5.7% interest rate, included an interest-only fixed rate until 2016, with the buyer paying $5.1 million down.

Faris Lee Capital, an in-house team of senior financing experts, worked with the seller to arrange an in-place loan for the properties a year ago, which resulted in “immense value during the current sale,” according to Faris Lee. This allowed the buyer to take advantage of below-market in-place debt with full-term interest only payments. Faris Lee Capital also managed the debt assumption process between the buyer, seller and lender.

Dennis Vaccaro, senior managing director, and Richard Walter, president, of Faris Lee Investments, represented the seller, Pacific Castle Props I LLC. The 1031 Exchange buyer was Trabuco Hills Pads LLC. “The pads at Trabuco Hills Shopping Center provided the investor with a unique opportunity to acquire single-tenant properties within an irreplaceable South Orange County retail property with an excellent tenant roster, below market assumable debt and long-term stability within a high income demographic area,” Vaccaro says.

Walter says that the strategy of selling off retail pads at well-performing centers such as Trabuco Hills Shopping Center provides small- to mid-sized buyers with an opportunity to own a part of a larger, established center. “The buyer can now reap the large- scale synergy and increased foot traffic benefits of being located within a major retail hub,” Walter says.

“Even though the retail market is still tough throughout the country, there is momentum for single-tenant pad sales,” Walter adds. “Cap rates are still reasonable for pads.”

Hook describes the net-leased pads as among “the premier properties in a coveted South Orange County submarket.” He explains that the northwestern corner of Santa Margarita and Marguerite parkways provides excellent frontage and visibility from these two main thoroughfares.

The location is between State Highway 241, known as the Foothill Transportation Corridor, and Interstate 5, the San Diego Freeway, in Southern Orange County. Another selling point of the deal was the demographic profile, according to Hook, who notes that the population within a three-mile radius is greater than 134,000 and the average household income is in excess of $105,000.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.