Sonnenblick-Eichner Lines Up $55M Refi for LA Assets
- Nov 07, 2019
Sonnenblick-Eichner Co. has arranged $55 million in long-term, non-recourse debt to refinance four properties totaling 206,000 square feet in El Segundo, Calif., which is part of Los Angeles’ South Bay submarket. The three office properties are at 2201 and 2221 Rosecrans Ave. and 831 S. Douglas St., and the 11,000-square-foot retail property is at 2231 Rosecrans Ave.
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All four are part of Continental Development Corp.’s 86-acre Continental Park, a master-planned, mixed-use development totaling about 3 million square feet of low- and mid-rise Class A office buildings and retail, restaurant, hotel and entertainment space. The development is along the Rosecrans Avenue corridor, 2 miles south of Los Angeles International Airport. The Douglas Street station on Los Angeles County Metro Rail’s Green Line adjoins the property.
Major tenants in the three refinanced office buildings include JP Morgan Chase Bank, CBRE and MotorTrend Group, a Sonnenblick-Eichner spokesperson told Commercial Property Executive. Continental Park’s amenities include more than a dozen dining options, numerous retailers, a movie theater, four hotels and a 24-hour gym.
The 10-year, interest-only loan carries a fixed interest rate of 3.34 percent. A portion of the loan proceeds reportedly will be used to fund costs associated with the lease-up of an 80,000-square-foot office building, whose tenant is expected to vacate early next year. This created an underwriting challenge, especially when seeking long-term debt, Sonnenblick-Eichner Principal David Sonnenblick said in a prepared statement. He explained that the assets’ history and strong sponsorship, and the demand for this type of space, along with other factors, helped to satisfy the lender(s).
More tech tenants
The South Bay office submarket saw a 2 percent uptick in vacancy, in part because of the Port of Long Beach moving its headquarters and vacating about 176,000 square feet, according to a third-quarter report from Cushman & Wakefield. Still, rents are rising in the South Bay, and especially so in El Segundo, where rates have increased by 23.5 percent over the past two years, in tandem with strong leasing activity. Monthly rents there now average $3.98 per square foot.
The report notes that El Segundo has become an increasingly attractive area for companies and investors who are looking to take advantage of its lower prices compared to Playa Vista and Santa Monica. Demand for office space in El Segundo is also sustained by the increasing number of media and tech tenants that are relocating there. In July, Vella Group, of New York, paid $50.8 million for a pair of El Segundo office buildings, planning to convert them into a creative office campus aimed at media, tech and entertainment tenants.