TUSTIN, Calif., Aug. 31, 2015 /PRNewswire/ -- Transwestern today announces it arranged equity and debt financing for the acquisition and repositioning of a 39,762-square-foot flex research and development facility located at 142 Franklin Ave. in Tustin, California. The redevelopment is scheduled for completion early in 2016. Transwestern's Robert Murphy, Gary Limjuco and Steven Orchard organized the financing on behalf of Harbor Associates LLC.
Transwestern sourced equity from a new discretionary fund representing several private investors. The non-recourse debt included a 60 percent loan-to-value ratio, a 3.5 percent interest-only rate and a four-year term. The financing structure exploits shifting dynamics to create above-market returns with a stabilized 8.3 percent yield on cost.
"Harbor saw potential in this asset that others missed because it requires a significant amount of due diligence," said Murphy. "Harbor focuses on mid-sized, Class B or better office repositioning opportunities in Southern California, and this asset presented an attractive opportunity at a favorable price."
The two-story, concrete tilt-up structure sits on 2.3 acres, half of which is vacant land that will be converted into outdoor amenities and additional parking to create the highest parking ratio among the building's competitive set. Additional improvements will include a new lobby, atriums, natural lighting, polished concrete floors and 14-foot exposed wood ceilings. The office redesign will cater to tenants seeking creative spaces, which are in high demand in Orange County.
"There is a significant supply and demand imbalance for creative space in Orange County, and owners of creative projects have seen incredible success, achieving rental premiums of 20 percent above traditional office rents," said Justin Loiacono, principal at Harbor Associates. "The Transwestern team presented us with a variety of capital solutions from both institutions and family offices, ultimately sourcing a partner that believed in our new platform and business plan for this asset."
14201 Franklin Ave. is located within 1 mile of Interstate 5, the 261 Toll Road and Jamboree Road, providing easy access throughout Orange County and Southern California. The property is also in close proximity to the Tustin Marketplace, a 1.6 million-square-foot outdoor shopping mall, and the 1 million-square-foot District at Tustin Legacy shopping mall.
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Management, Tenant Advisory, Capital Markets, Research and Sustainability services, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern.
ABOUT HARBOR ASSOCIATES
The Principals of Harbor have over 25 years of experience in Southern California and have closed $1.5B in acquisitions and asset managed over $2.5B in assets including over 3M SF of office. Harbor is a JV with the Bascom Group.