July 17, 2018— An affiliate of Vista Investment Group has acquired from Redwood Partners, Inc the leasehold interest in Media Park Santa Monica, a 101,369-square-foot creative office campus in Santa Monica’s Media District.
Located on a 5.22-acre site at 1813 Centinela Avenue, Media Park Santa Monica is the adaptive reuse of a former R&D facility built in 1978. The creative office campus comprises three renovated one- and two-story office buildings ranging in size from 10,246 to 59,254 square feet. The buildings feature ceiling heights up to 20 feet, expansive collaborative work areas, polished concrete floors, and roll up doors providing access to outdoor patios and wi-fi enabled courtyards. Common area amenities include EV charging stations, outdoor meeting areas and is surfaced parked at an above market rate of 4:1000.
“Financing an acquisition of an asset subject to a ground lease with less than 30 years of term left is extremely difficult to do and severely limited the buyer pool,” said Vista Investment Group President and co-founder Jonathan Barach. “Because of our creative capital and the fixed-income expertise of our principals, we were able to value the cash flows over the remainder of the ground lease terms, just like a bond. We determined this to be a very attractive long-term opportunity for Vista and our investors. As a result we were able to pick it up at a compelling cap rate, secure accretive leverage, and take advantage of some serious tax benefits.”
The acquisition was financed with a long-term loan through a national bank, which was arranged by Managing Director Marc Schillinger and associate Ryan Ash of HFF.
“The availability of financing for leasehold acquisitions is very limited and a lot of people said Media Park Santa Monica was un-financeable,” said Schillinger. “We ultimately identified several lenders that were willing to overcome the leasehold challenges and arrived at extremely competitive terms for Vista. Combined with the Sponsor’s expertise and track record, they were able to come up with a creative loan structure that allowed Vista to take advantage of the opportunity.”
Media Park Santa Monica was 100 percent leased at the time of purchase, with tenants consisting of a mix of design, advertising, post-production and tech companies.
The acquisition of Media Park Santa Monica adds to Vista’s one million-square-foot office portfolio in California. Its other assets are located in Oregon and Washington.
Bob Safai, Founding Partner and President of Los Angeles-based Madison Partners represented both parties in the transaction.
Andrew Kirsh, partner and head of the real estate practice for Los Angeles-based law firm Sklar Kirsh acted as legal counsel to Vista Investment Group in the transaction. Other members of the legal team included partner Mark Nicoletti, Senior Associate Adrian Boddie, and real estate specialist Tina Legg-Bellossi