Thursday, July 29, 2010

Faris Lee Investments' Creative Deal-Making Completes 2 Los Angeles County Retail Property Sales Totaling Nearly $13M

IRVINE, CA – Faris Lee Investments, the nation’s largest retail-specialized investment sales and advisory team, has successfully closed two Los Angeles-area property transactions totaling nearly $13 million.

 The 100 percent-leased assets include a property occupied by CVS/pharmacy and Starbucks Coffee Drive-Thru in Paramount that sold for $7.95 million, and Burger King Plaza (top left photo)  located in Los Angeles that sold for $4.95 million with tenants including Burger King, ACE Cash Express and neighborhood shops.

In both deals, Faris Lee brought its unique workout expertise to the transaction as well as bank and special servicer relationships to ensure success.

“Critical to the current market, Faris Lee managed the complex task of transferring assumable CMBS loans to the new buyers while at the same time obtaining sale prices exceeding the sellers’ expectations,” said Richard Walter, (top right photo) president, Faris Lee Investments.

 “In these transactions, the buyers were not only able to obtain below-market financing, they were able to capture favorable non-recourse provisions, meaning that their financial liability is limited.”

Though the assumption process can be complex, CMBS loans offer substantial benefits to the buyer that conventional bank loans do not.

Loan assumption is an especially attractive option in high interest rate environments and tight credit environments. Unlike conventional bank financing, the CMBS loan offers non-recourse provisions to the buyer.

“The CMBS loan assumption process is long and complicated due to the numerous parties involved and the long list of requirements that must be met,” said Nick Coo, managing director for Faris Lee Investments.

“We were able to provide the strategic advisory on the transactions and craft a highly skilled team for the buyers that included members of our Faris Lee Capital group, who could work closely with the banks and special servicers.”

On the first transaction, Coo represented the seller, Los Angeles-based Topaz Paramount, LLC, as well as the buyer, Texas and Southern California-based NASA Paramount Centre Enterprises, LLC.

 Despite an environmental issue and a rental rate reduction for Starbucks during the marketing process, Faris Lee identified the right buyer and closed the transaction at a 6.6 percent cap rate and at a sale price above seller’s expectations.

The property provided the buyer with a more favorable CMBS loan with a superior 5.76 percent fixed interest rate, significantly below current market interest rates. The 15,722-square-foot property located at 8859 Alondra Blvd. was built in 2008 and is situated at the intersection of Lakewood and Alondra Blvd.

For Burger King Plaza in Los Angeles, Coo represented the seller Los Angeles-based 7201 South Figueroa, LLC. Coldwell Banker represented the 1031 exchange buyer UHL, LLC, from Southern California.

The transaction closed at a cap rate of 6.9 percent. Located at 7201-7229 S. Figueroa St. in Los Angeles, the three-building property totaling 16,127 square feet was built in 1987 and 1994.

It is situated at the major intersection of Figueroa St. at Florence Ave. The assumed CMBS loan featured a fixed interest rate of 6.2 percent for seven years and is amortized over a 30-year schedule. Considering the difficulty in obtaining retail loans in today’s environment, the assumed loan provided unmatched financing for the buyer.

Contact: Darcie Giacchetto, 949.278.6224, Spaulding Thompson & Associates
For Faris Lee Investments

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