Cruzan’s first acquisition in Orange County didn’t go so well.
The firm sold the 223,000-square-foot office complex in Laguna Hills for a loss this month, disposing of it for about $2 million less than what it paid in 2015.
Cruzan bought the property at 23332 Mill Creek Drive for $46 million in 2015, records show, and sold it for $43.9 million earlier this month. The firm had also spent money on renovating the property in 2016. The office complex is now about 92 percent leased.
The buyer was Kingsbarn Real Estate Capital, a Las Vegas firm that specializes in sponsoring 1031 exchanges, among other investments, according to an announcement from the firm last week that did not disclose a sale price.
Timor Kelemen’s The Kelemen Group will manage the property and work on any future redevelopment, according to Kingsbarn.
Few office properties in Orange County have sold over the last year, given rising interest rates and stubborn vacancy rates. Asking rents have also suffered as a result, dropping about 4 percent year over year to $2.81 a month in the third quarter, according to JLL.
Kingsbarn scored two loans for the acquisition — one a $24.8 million loan from Argentic Real Estate in October, records show, shortly before the U.S. Federal Reserve hiked rates again by 75 basis points.
Argentic provided the seven-year, non-recourse CMBS loan, according to George Smith Partners, which arranged the financing for the property. Terms were not disclosed.
The remaining portion was $14.6 million in non-recourse bridge financing, George Smith said in a statement earlier this month, though the firm declined to name the lender.
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