Griffin Capital Essential Asset REIT, Inc. (the “REIT”) announced the sale of a 151,289 square foot, Class “A”, three-story office building located at 2160 Grand Avenue, El Segundo, California (“Property”) for $63.5 million or $420 per square foot.
Purchased by the REIT in February 2014 for $52.7 million, the Property was originally 100 percent leased to a single-tenant with a lease expiration of June 30, 2021. As part of the transaction, the REIT delivered the property unencumbered by this lease.
In response to abundant investor demand for value-add office property investment opportunities, the REIT made a strategic decision to position the property for sale. Recognizing that value-add buyers prefer vacant buildings, the REIT’s team bought out and terminated the sole tenant’s lease and did so on an accretive basis. The termination permitted the sale of the asset substantially vacant. As expected, the scarcity of Westside Class “A” office buildings having large, contiguous, office blocks drove significant institutional investor interest in the Property, and this competition among interested buyers resulted in the attractive sale price. Adeptly executing on the combination of an attractive buyout and a simultaneous sale, ultimately drove a strong return for the REIT.
Michael Escalante, Chief Executive Officer of the REIT stated, “Since the REIT’s acquisition, the El Segundo office submarket has benefited from outsized tenant demand in the city’s Lower Westside markets, drawing to El Segundo a larger and more diverse tenant base than had historically been interested in the location, resulting in material growth in both office rental rates and institutional capital investment. We believed the Property would ultimately be the beneficiary of this growth, and that original acquisition thesis was proven correct by the economics of this sale transaction.”
The REIT was represented by the Shannon Team of Newmark Knight Frank. The building was purchased by SteelWave.