Newmark Knight Frank (NKF) has announced it has completed the $138.5 million sale of 101 Continental, a soon to be vacant office tower totaling 340,000 square feet in Los Angeles’ El Segundo submarket.
NKF’s Co-Head of U.S. Capital Markets Kevin Shannon, Executive Managing Directors Ken White and Rob Hannan, and Senior Managing Directors Laura Stumm and Michael Moll represented the seller, Phoenix-based VEREIT, Inc. The buyer, Boston-based TA Realty, was self-represented.
VEREIT purchased the property in 2014 for $98 million which was 100 percent leased to Northrop Grumman. When the tenant decided to vacate the building, VEREIT engaged NKF to market the property as a redevelopment opportunity.
“Based on the strength of the El Segundo office market and the quality of the building, we were able to achieve over $400/sf sale price. Disposing of this property decreased office exposure and strengthened VEREIT’s portfolio,” said Thomas W. Roberts, Chief Investment Officer, VEREIT.
Developed by Continental Airlines in 1972, and significantly upgraded in 2008, 101 Continental has provided critical headquarters functionality for the past 46 years and is well designed and fully flexible to accommodate future tenant demand. The building features floor-to-ceiling glass on every floor and provides unobstructed, 360-degree ocean views from Palos Verdes to Santa Monica. Northrop Grumman will be vacating the building upon its lease expiration in May 2019, at which point the buyer intends to commence a comprehensive building renovation.
“The marketing process for 101 Continental was highly competitive and a reflection of the abundance of value-add capital and the scarcity of value-add investment opportunities in gateway West Coast markets,” said Shannon.
“The strong response to this offering from capital validates El Segundo as a target Westside office market. The appetite for this deal was deep with domestic institutional capital, REITs, and foreign buyers competing,” added Hannan.
“The opportunity to acquire a vacant Westside office asset of this caliber is extremely rare,” added Stumm. “TA Realty’s repositioning of 101 Continental will provide much needed creative inventory to a quickly tightening ‘Class A’ El Segundo office market. While El Segundo has experienced a 50 percent increase in rental rates over the past five years, it still trails the rate increases of neighboring Culver City (68 percent) and Playa Vista (79 percent), indicating room for further rental rate growth.”
About TA Realty
TA Realty is among the largest and most experienced providers of real estate investment management services to institutional and private investors. Since its inception in 1982, TA Realty has managed more than $25 billion of real estate assets through a series of value-added, commingled funds and customized core separate accounts. TA Realty’s investment philosophy focuses on creating diversified real estate portfolios that generate strong cash flow, benefit from intensive asset management and result in long-term value creation. For more than three decades, TA Realty has maintained this philosophy through multiple real estate and economic cycles, a strength recognized by leading pension funds, endowments, foundations and high net worth individuals. For more information please visit www.tarealty.com.
VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. The Company has total real estate investments of $15.6 billion including approximately 4,000 properties and 95.0 million square feet. VEREIT’s business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. VEREIT is a publicly traded Maryland corporation listed on the New York Stock Exchange. Additional information about VEREIT can be found on its website at www.VEREIT.com and through social media platforms such as Twitter and LinkedIn.
About Newmark Knight Frank
Newmark Knight Frank (“NKF”), operated by Newmark Group, Inc. (“Newmark Group”) (NASDAQ: NMRK), is one of the world’s leading and most trusted commercial real estate advisory firms, offering a complete suite of services and products for both owners and occupiers. Together with London-based partner Knight Frank and independently-owned offices, NKF’s 16,000 professionals operate from approximately 430 offices on six continents. NKF’s investor/owner services and products include investment sales, agency leasing, property management, valuation and advisory, diligence, underwriting, government-sponsored enterprise lending, loan servicing, debt and structured finance and loan sales. Occupier services and products include tenant representation, real estate management technology systems, workplace and occupancy strategy, global corporate services consulting, project management, lease administration and facilities management. For further information, visit www.ngkf.com.
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