Irvine, Calif.—A retail property in Rancho Santa Margarita, Calif. was recently sold for a total of $56.6 million. Buyer Plaza El Paseo Center LLC worked with a Faris Lee Investments team that consisted of Rick Chichester, Nicholas Coo and Chris DePierro. The team also represented seller K&G El Paseo 1 & 2 LLC.
According to DePierro, “our strategy involved having the buyer assume the existing loan – thus saving the seller more than $6 million in defeasance penalties,” while also noting that it required $24 million in cash to the existing loan, which is substantially more than normal. The transaction process required Faris Lee Investments to create an escrow structure that allows the buyer to secure the necessary equity by selling a number of its multifamily assets during the process. As a result, the proceeds “infused the equity into Plaza El Paseo as the upleg in a 1031 exchange,” Coo noted in prepared remarks.
Transaction specifics on the Plaza El Paseo deal generated a cap rate of 5.4 percent, a cash-on-cash yield of 3.7 percent, and a per-square-foot price of $550.