Marina Corporate Center, National Asset Services

Marina Corporate Center

Los Angeles, California

NAS enabled ownership to stave off foreclosure while maintaining an equity share in the asset. Those who invested their new funds alongside a venture group realized a return of three times their original investment within a sixteen-month period.

Marina Corporate Center is a six story 88,515 square-foot, Class-B, office building located in a submarket of Los Angeles known as Playa Vista.  The property was originally purpose built in the mid 1980’s as the corporate headquarters for the Sizzler restaurant chain.  In 2003/2004 Sizzler relocated their operation and the asset was leased to a single tenant user, Edutrek Corporation, occupying the space as American InterContinental University (AIU).  The property was acquired by a Tenant-in-Common (TIC) ownership group in 2004.  NAS was engaged as the Asset & Property Manager in January of 2011.  As NAS was transitioning onto the assignment:

  • AIU vacated their premises, rendering the space entirely unoccupied.  The parent company was obligated to make rent payments thru to July of 2015 at which point the cessation of revenue would have made it impossible for the owners to cover debt service.  The TICs would have likely defaulted on the loan, resulting in ultimate foreclosure.
  • The loan’s prepayment date had passed, resulting in the accrual of default interest that put the total rate in excess of 9%.
  • The submarket was overbuilt and experiencing roughly 30% vacancy in the first quarter of 2011.  These figures were further exacerbated by a glut of 240,000 sublease space due to Fox Interactive pulling out of the market and scrapping their expansion plans.  Landlords were competitive on rates and free rents and as a result the Class A office space provided better options for viable tenants.
  • NAS aggressively worked with local leasing brokers to re-lease the property, but the then-current market rents offset by required TI dollars made the economics impossible. 

By late 2012/ early 2013 changes in the submarket developed that indicated potential opportunities for the property; however again the TICs were not in a position to fund the necessary work.

In 2012 and after 10 years of discussion, permits were finally approved for a major four block, $260MM lifestyle center located immediately across the street from the Marina Corporate building providing a downtown to this submarket that would change the area substantially. 

In addition, the area was beginning to be known as “the silicon beach” – which encompassed an area from Santa Monica to Playa Vista and users such as Facebook, TMZ and YouTube were beginning to occupy the market.

NAS realized that this was a critical time for the asset and understood that changes needed to be acted upon quickly in order to capitalize on the submarket developments.  The owners were facing possible foreclosure and a complete loss of their investment.  NAS understood that the building would require a complete repositioning that included renovating the façade, the building skin and the interior improvements in order to meet the demands and styles of the submarket’s incumbent high-tech users in a multi-tenant format.  NAS immediately prepared presentation packages to source venture capital groups to step in and complete the re-positioning that the owners would be unable to achieve alone. 

RESULTS

A group was selected that was willing and able to provide the capital, and a sale transaction was completed on August 30, 2013.  The owners, as a result of the efforts of NAS, were able to stave off foreclosure while maintaining an equity share in the asset.  Those who invested their new funds alongside the venture group realized a return of three times their original investment within a sixteen month period. NAS has remained on as the Property Manager and provides a pivotal role in the redevelopment of Marina Corporate Center.

 

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