Dallas Duo Lassoes Fourth Santa Monica Building

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Santa Monica’s Third Street Promenade, a top destination for tourists visiting the region, seems to hold a similar allure to out-of-town investors.

Lincoln Property Co., in a joint venture with Centennial Real Estate Co., last month bought the 28,000-square-foot food court building at 1315 Third St. Promenade for $20.3 million.

The Dallas companies purchased the five-story retail property from USA San Diego, which paid $18.1 million for the property in 2007, according to Los Angeles County records.

The acquisition was the fourth that Lincoln and Centennial have made together in Santa Monica in the last two years, including two office properties and one medical property.

“The property fits really well into our portfolio and our strategy of buying well-located assets with significant opportunity,” said Scott Schoenfeld, managing partner at Centennial. “In this case, we have a relatively new property on the Promenade that really has not been touched since it was built.”

Built in 1993, the food court building was about 55 percent occupied at the time of sale. Tenants include national fast-food chains McDonald’s, Subway and a handful of regional eateries. Two of three levels of office space have been vacant for about six months.

David Binswanger, executive vice president in Southern California for Lincoln, said the co-owners plan to spend more than $3 million to reimagine the two-level food court, as well as upgrade office space to attract creative tenants.

“We plan on doing a heavy cosmetic retrofit of the ground floor to open up the space,” he said. “As the only food court on the Prome-nade, we want to be respectful of price point, but we also want to upgrade the tenancy.”

Barry Beitler and Mike Rago of Beitler Commercial Realty were the brokers of record on the deal.


Banking on Burbank

A trio of real estate firms that jointly developed and own the Pointe, a Burbank media campus, received a $220 million loan at year’s end to refinance the property.

West L.A. private lender Mesa West Capital provided the five-year loan to borrowers Worthe Real Estate Group, Stockbridge Capital Group and M. David Paul & Associates, which together built the 14-story complex at 2900 W. Alameda Ave. in 2009.

The loan was one of the largest Mesa West has ever secured and the third the 10-year-old lender has provided to affiliates of Worthe for properties in Burbank.

Ronnie Gul, a principal at Mesa West who originated the financing, said the overall quality of the building and the ownership’s momentum in leasing it gave him confidence in making the large loan.

“The property is a high-quality asset with good demand fundamentals in a good location,” he said. “It’s also got very strong sponsorship in Worthe and Stockbridge who are well connected locally and well capitalized.”

The 480,000-square-foot Class A office building is about 70 percent leased to tenants that include Warner Bros., Outlook Amusements, FremantleMedia, Legendary Pictures and KCET. Still, four contiguous upper-level floors remain vacant.

Gul said the loan, which was primarily used to pay off existing debt, will also be used to fund efforts to lease the balance of the building.

Sale-Leaseback

Douglas Steel Supply Inc., a 42-year-old Vernon company that processes rolls of sheet steel, sold the industrial buildings it occupies late last month in a deal valued at $14.8 million.

The company closed the deal Dec. 30 with New York real estate investment trust Gramercy Property Trust, which acquires and manages leased industrial properties nationwide. The properties, at 5764 Alcoa Ave. and 3311 E. Slauson Ave., sit on about 5.7 acres and total nearly 130,000 square feet.

Barbara Emmons, a broker and vice chairman with CBRE Group Inc. who specializes in industrial, office and land sales, represented the seller in the deal, along with Brandon Gill, Mike Kendall and Rebecca Perlmutter. Emmons said Douglas sold the buildings then leased them back from Gramercy through 2028.

“We often see owner-users decide to sell buildings in order to get out of the real estate business,” she said. “In this case, it made the most sense operationally and financially for the seller to divest of ownership and continue to occupy these buildings as a tenant.”

Staff reporter Bethany Firnhaber can be reached at [email protected] or
(323) 549-5225, ext. 235.

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