Southern California Office Real Estate Blog

Pasadena Gateway Office Tower Trades for $28M

Pasadena Gateway Office Tower Trades for $28M

Locally based private investment group Pacific Starr Pasadena LLC has acquired the 121,462-sf Gateway Tower office building at 3452 E. Foothill Blvd. for $28.35 million. Pacific Starr bought the 11-story property from Gateway Tower LLC.

The Gateway Tower property occupies a site that “is very well located in the heart of the Foothill commercial corridor and immediately adjacent to retail and residential development as well as a light rail station,” notes John Pipia, managing member of Pacific Starr. The rail station is the Gold Line Metro Link, which was recently completed at the corner of Sierra Madre Villa and the 210 Freeway, about a block from the Gateway Tower.

Pipia notes that the new Pacific Starr asset is the only high rise on Foothill Boulevard, has freeway visibility and offers mountain views. Built in 1969, the office project is situated in the midst of an area that “has undergone a dramatic transformation in retail, housing and new commercial growth” in the past 10 years, Pipia says.

Another Pacific Starr executive, SVP Betty Ma, comments to GlobeSt.com that the East Pasadena market surrounding the Gateway Towers building “has matured handsomely over the last decade and has become a mature business address in an amenity-rich environment.” Ma notes that the East Pasadena market is the corporate headquarters for ATI Systems International Inc., Tetra Tech Engineering, Optical Research Associates and major employers such as IndyMac Bank, Avery Dennison and others.

Other signs of the improvement in the market are the rising prices of office buildings. A building at 3280 East Foothill is on the market, and early indications are that offers of $300 per sf are being considered.

Another building on the market, at 2947 Bradley St., is said to be drawing offers of $250 per sf. Tenants at the Bradley Street property include Earthlink, which earlier this year renewed its lease for 110,497 sf at the building, helping Pasadena’s vacancy at the end of the third quarter to reach an all-time low of 3.7%.

The Gateway Tower purchase is the first investment in Pasadena for Pacific Starr Group, which was founded more than 10 years ago. Its holdings have included the Hyatt Regency Hotel in Sacramento and several commercial projects in San Diego.

Financing for the Gateway Tower acquisition was arranged by Thomas Dudley Jr. of Newmark Realty Capital Inc. The financing was through Allstate Investments LLC, which Newmark represents as a correspondent.
By Bob Howard of GlobeSt.com

The National Association of Realtors reports Record Flow of Capital into Commercial Real Estate …..

The National Association of Realtors reports Record Flow of Capital into Commercial Real Estate …..
 
One of the most noteworthy things happening in commercial real estate today is the record level of capital flowing into commercial real estate. While many argue that this capital is the result of widespread risky loans, in actual fact, it is the large institutional investors, pension funds and foreign investors who are acquiring significant amounts of commercial real estate. Over $236 billion of commercial real estate transaction volume was recorded during the first ten months of 2006. This represents just those commercial properties valued at $5.0 million or more. Much of this increase in transaction volume is the result of portfolio trades, particularly within the office sector.
 
NAR FORECAST: Institutions (pension funds, insurance companies) are among the most risk-adverse investors in commercial real estate. Institutional investors do not normally invest money if they think there is
going to be a downturn in any investment vehicle. While regulators are concerned about an impending “bubble” bursting in commercial real estate, the evidence does not bear this out. The S & L crisis has not been forgotten by investors in commercial real estate.
 
The Office Sector: Respectable job growth, particularly within  office using industries helps office fundamentals….
The office sector is one of the best performing segments of commercial real
estate. With vacancy rates falling and rent growth gaining traction, it is no wonder investors have been snapping up office buildings in both suburban and Central Business District locations.
 
Transaction volume for office buildings is up 31% over last year, partly due to the improved fundaments, which often leads to improved net operating income and solid returns. While everyone bemoans the rising cost of construction, for the office sector in particular, high construction costs have resulted in a slowdown in speculative office building construction — not a build-to-suit and without a significant pre-lease. NAR FORECAST: It is not unrealistic to suppose that the national office vacancy will be approaching 12% by the end of 2007. These are vacancy numbers not seen since 2001. Long-term forecasts call for further gradual declines in the office vacancy rate.
 

NBC Universal Unveils Plan for 391 Acres

NBC Universal Unveils Plan for 391 Acres

UNIVERSAL CITY, CA-NBC Universal has unveiled a long-term plan for its 391-acre Universal Studios site that would add hundreds of thousands of square feet of office space, 2,900 housing units, 100,000 sf or more of new retail space, new production facilities and substantial other new development. Besides Universal Studios, the site is already home to the studio’s Universal Studios theme park and the Universal CityWalk mixed-use retail development.

Ron Meyer, president and COO of Universal Studios, says the new plan is designed to revitalize production facilities, possibly extend studio facilities to the adjacent Universal City Metropolitan Transit Authority station property, refresh its theme park and create a new residential neighborhood on a portion of the property. The plan is designed to “create a blueprint for Universal City for the next 25 years” that will enable Universal to remain the largest working studio in the world and remain one of Los Angeles’ top tourism destinations as well as one of the San Fernando Valley’s top employers.

Thomas Properties Group of Los Angeles and Rios Clementi Hale Studios served as advisers to NBC Universal on the blueprint, which Universal calls its “Vision Plan.” The plan will focus on three areas: the studio’s front and backlots, the entertainment portion of the site and a 124-acre portion called Universal Village that would include 2,900 housing units.

The studio front and backlot plan calls for 390,000 sf of production uses and 335,000 sf of new office space. It would revitalize the film and television production facilities with new and relocated outdoor sets, new post-production facilities, sound stages, producer bungalows, a screening theater, a rehearsal hall, a film vault and expanded prop/costume shop.

The 2,900 housing units in the Universal Village portion would include apartments, stacked lofts, town homes and condominiums and would be developed in three villages that would be connected by a pedestrian-oriented street, with 100,000 sf of retail and restaurant space and 35 acres of open space. The neighborhoods would be environmentally sensitive, transit-oriented and designed to meet Leadership in Energy & Environmental Design (LEED) certification standards.

The entertainment portion of the plan calls for “refreshing” Universal CityWalk and Universal Studios Hollywood theme park with new attractions and enhanced retail and dining facilities totaling approximately 80,000 sf within the theme park. At CityWalk, the future plan could include upgrades to the movie theater complex, enhanced retail and dining facilities totaling approximately 35,000 sf and a 100,000-sf live production studio where guests become part of the action.

The proposal also includes possible construction of a new 3,000-seat enclosed entertainment venue and a 500-room hotel, expanded parking and circulation. The plan anticipates that the amphitheater on the site could be replaced in the future in connection with the proposed development.

In addition to these plans, Universal and Thomas Properties Group are initiating discussions with the MTA regarding a proposed new studio and office campus at the Universal City MTA Station. NBC Universal would become the major tenant in the new complex, which would be developed by Thomas to include 200,000 sf of production facilities, 450,000 sf of entertainment-related office space and a comprehensive parking plan.

Universal’s Vision Plan also includes a regional transportation plan “where transit is integrated into the very design of the project,” according to company officials. The elements under consideration for that plan include a shuttle system from Universal Village and throughout Universal City to the MTA Station, a “Great Street” through Universal Village connecting Forest Lawn Drive to Coral Drive, freeway and access improvements and a number of other projects designed to improve traffic flow and pedestrian flow.

Universal City lies partly in the City of Los Angeles and partly in Los Angeles County, so NBC Universal will file applications for its new plan with both the city and the county. Thomas Properties Group will file a separate application with the City for the Universal City MTA Station studio and office campus proposal.

By Bob Howard of GlobeSt.com

Airport Plaza Buildings Garner $23M

Airport Plaza Buildings Garner $23M

LONG BEACH, CA-Legacy Partners has acquired the 124,361-sf Airport Plaza class A office project from Pacifica Real Estate Group and Investcorp, with Buchanan Street Partners of Newport Beach advising the sellers. The two Airport Plaza buildings, each two stories, are at 5000 and 5001 Airport Dr.
The Airport Plaza buildings are part of the Long Beach Airport Business Center and are on a ground lease with the City of Long Beach. Built in 1984 and 1988, the buildings are 98% occupied by a tenant roster including Verizon, the Federal Aviation Administration, Embry-Riddle Aeronautical University and Majestic Insurance Co, among others.

Buchanan notes that the Airport Plaza location is adjacent to Long Beach Airport and near the ports of Long Beach and Los Angeles, where international trade has expanded substantially in recent years. The L.A. County Economic Development Corp. expects two-way trade in the Long Beach and Los Angeles region to grow 12% in 2007 and 13% in 2008.

Downtown Long Beach comprises more than 4.2 million sf of office space, according to City of Long Beach figures, with about 2.3 million sf of that in class A space. The city has been working in recent years to redevelop areas in and near Downtown Long Beach with new retail, residential and mixed-use developments as well as tourist-oriented attractions. Brokers say these developments bode well for the office market.

Legacy represented itself in the transaction, which was the second investment sale that Buchanan Street Partners has completed for Pacifica Real Estate Group and Investcorp. Pacifica is headquartered in Santa Barbara, with offices in Newport Beach and Santa Maria, while Investcorp operates in New York, London and Bahrain.

By Bob Howard of GlobeSt.com

DEEDS TO TRUST

DEEDS TO TRUST

A deed is the document that transfers ownership of real estate. It contains the names of the old and new owners and a legal description of the property, and is signed by the person transferring the property. Several different types of Deeds can be used to convey real estate.
GRANT DEED
America’s most popular type of deed, a grant deed transfers ownership and implies certain promises that the seller makes to the buyer regarding the condition of the title to the property. The Grant Deed contains three warranties:
1.     the Covenant of Seisin - a promise by the grantor that he owns the estate that he is conveying.
2.     Covenant Against Encumbrances - a promise by the grantor that the property is free and clear of any encumbrances (liens, loans, mortgages, taxes, etc.), other than what has been disclosed by the seller.
3.     Covenant of Quiet Enjoyment. This obliges the seller to defend the title against future claims on the property. If a third party claiming to have an interest in the property appears years after the Grant Deed has been delivered to the buyer, the seller is required to defend the title which was given to the buyer.
Insist upon obtaining a Grant Deed when any of your properties are paid in full.
WARRANTY DEED
 A warranty deed  transfers your ownership and explicitly promises the buyer that you have good title to the property, among other promises. A Grant Deed replaces its use in California.
BARGAIN AND SALE DEED
A Bargain and Sale Deed is a weaker instrument than a Grant Deed. When a seller uses a Bargain and Sale Deed, the buyer does not get the three covenants that a Grant Deed conveys, and the seller is under no obligation to defend the title.
QUITCLAIM DEED
 
With a Quitclaim Deed, the grantor disclaims any interest they might have in a piece of real property, and passes that claim to another person (the grantee). A quitclaim deed neither warrants nor professes that the grantor’s claim was actually valid. Quitclaim Deeds are sometimes used for transfers between family members, gifts, or to eliminate clouds on title, or in other special or unusual circumstances.
Another common form of quitclaim deed is the tax deed, used by government authorities when selling properties seized for nonpayment of taxes. The Quitclaim Deed will not promise that the buyer will obtain clear title to the property. Such assurances must come from a title insurance company or an attorney who performs a title search.
In most common law jurisdictions, a quitclaim deed is considered to be an instrument of  estoppel, meaning it estops or prevents the grantor of the quitclaim deed from later claiming that he or she has an interest in the property.
In the Commonwealth of Massachusetts, a quitclaim deed is known as a release deed.
 
TRUST DEED
 
A trust deed (a.k.a. Deed of Trust) is not used to transfer property. It’s truly just a version of a mortgage. A trust deed transfers title to land to a “trustee,” usually a trust or title company, which holds the land as security for a loan. When the loan is paid off, title is transferred to the borrower / buyer.
 
CONTRACT FOR DEED
 
Also known as a ”contract of sale,” “land sale contract,” or “installment sales contract,” a Contract for Deed is used when a seller finances a property for a buyer. The Contract for Deed states that the seller will keep title to the property until the buyer pays off the loan.
 
RECORD DEEDS TO ESTABLISH PRIORITY. The person who is transferring the property should take the deed to a notary public, who will verify that the signature on the deed is genuine. The signature must be notarized and stamped before the deed will be accepted for recording.
The deed should be recorded to be valid.  Take the signed, original deed to the land records office in the county where the property is located. In most counties, it’s at the courthouse.  The clerk will take the deed, stamp it with the date and record location numbers, make a copy, and give the original back to you.
In the event of conflicting claims to a property, the first grantee to record their deed usually wins at the courthouse.
 
“First in time is first in right” is the basic rule.
 
 “There are exceptions,” notes real estate columnist Bob Bruss. For example, “When the recorded deed was a gift and the prior unrecorded deed was paid for with consideration and/or the grantee with an unrecorded deed occupied the property, thus giving constructive notice.”

OWN MARKETABLE TITLE

No matter what type of written real estate deed you receive, insist on obtaining an owner’s title insurance policy. The entire title insurance industry depends on interpreting both state recording laws and their application to a specific document affecting a particular property.
 
“When is the last time you heard of a homeowner encountering a title insurance claim?” asks Bruss. “Although I’ve been buying and selling real estate almost 40 years, I have never had to file a title insurance claim, nor have I ever heard of a title insurer paying a title policy claim.”

Title insurers research a title before insuring it. Even if title insurer makes a mistake that isn’t discovered until many years later, the title insurer still must pay the insured property owner either (1) the diminished value of the property if the title insurer failed to disclose a recorded document, such as an underground easement through the backyard, (2) cost of correcting the error, such as moving an underground easement pipeline, or (3) the full policy limit if the title was completely defective.

For a one-time premium paid at the time of property purchase, the owner’s title policy remains in effect as long as the insured owner or the heirs own the property.

Jodi Summers is Director of the Investment Division at Boardwalk Realty. For your real estate needs, e-mail Jodi Summers at jodis@boardwalkrealty.com, or call (310) 309-4219. Visit her websites at www.SoCalInvestmentRealEstate.com or www.santamonicalandmarks.com.
 

Davenport Partners and Buchanan Street Partners have acquired a vacant office building of nearly 90,000 sf

Buyers See Value in Empty Office Project

COVINA, CA-Davenport Partners and Buchanan Street Partners have acquired a vacant office building of nearly 90,000 sf in a value-added play, with Buchanan investing $3.4 million and arranging a $16.8 million loan. The two companies, both based in Newport Beach, see upside in leasing up the five-story class B building at 800 S. Barranca Ave.

Davenport and Buchanan acquired the property from Limar Realty Group. Buchanan invested the $3.4 million in equity via its Buchanan Fund V, with Davenport investing 20% equity. The sales price was not disclosed, but the Davenport-Buchanan venture is believed to have paid slightly more than $14.15 million for the property. The $16.8 million loan that Buchanan arranged was with Wrightwood Capital.

The additional funding beyond the purchase price includes the cost of repositioning the building into a multitenant property from its former single-tenant status. The total capital expenditure budget for renovation and leasing is more than $6 million.

Robert Brunswick, president and CEO of Buchanan Street Partners, cites the “minimal supply of large block space available to tenants,” along with the location of the building and other features of the property that appealed to the buyers. Following renovations, Davenport and Buchanan anticipate leasing the space over about 18 months to both large-block and small tenants. The renovated building will offer suites from 800 sf to nearly 21,0000 sf.

Built in 1981, 800 S. Barranca is situated on nearly an acre of land and is a block north of the Interstate 10 Freeway as well as within five miles of four other major Los Angeles freeways. The building offers one of the highest parking ratios in the market, 4.8 parking spaces per 1,000 sf, compared with a typical ratio closer to 3.8 spaces per 1,000 sf.

The new owners have already started the renovations, which will include upgrades to the lobbies, elevators, corridors and parking structure appearance. Although the building was originally designed as a multitenant project, the County of Los Angeles leased 100% of the building for 16 years. But the county needed larger premises and relocated before the close of escrow.
By Bob Howard of GlobeSt.com