Younan Properties Achieves 125% IRR in $50.5 Million Disposition of Sepulveda Center
Sale yields total return of more than 330% in just two and one half years of ownership
LOS ANGELES, CA (June 06, 2006) Younan Properties, Inc. (YPI) announced today the $50.5 million sale of Sepulveda Center, a 173,727-square-foot Class A office building at 3415 Sepulveda Boulevard in Los Angeles, CA. Newport Beach-based KBS Realty purchased the 12-story building in a transaction that generated an impressive 125% annual IRR to Younan Properties and a total return of more than 330% on invested capital in the two and one half years the property was held.
Mark Perry, Senior Vice President of Investment Properties-Private Client Group of CB Richard Ellis and Tom Bohlinger, Senior Vice President of CB Richard Ellis' Los Angeles Institutional Office Investment Team represented both parties in the transaction. Purchased from Equity Office Properties Trust (NYSE: EOP) for $27.5 million in January 2004, Sepulveda Center enjoyed a 20% boost in occupancy over the course of Younan Properties ownership.
Within our first six months of ownership, we increased Sepulveda Center's occupancy from 78% to 95% and transformed the property into a modern Class A building while managing our operating expenses 30% below the previous owner, Equity Office Properties Trust (NYSE:EOP), noted Zaya S. Younan, Chairman and CEO of Younan Properties, Inc. With our strong focus on tenant satisfaction, as well as operational management, we were able to achieve a profitable sale that contributes to the groundwork we are laying for an aggressive acquisition campaign focused on high growth markets in Chicago, Dallas and Houston. The time to exit the Los Angeles office market and enter a new, emerging market is excellent and we intend to capitalize on it.
It was a win-win for both buyer and seller, said Mark Perry, CBRE. Younan Properties benefited from their keen insight and the improving marketplace. KBS understands the inherent value of owning well located Class A real estate in West Los Angeles and the potential upside through rent appreciation.
Built in 1982, the all glass high-rise at Los Angeles' Olympic Corridor is visible from the San Diego (405) Freeway. It is currently 98% occupied by major tenants that include JAMDAT Mobile and Freeman, Freeman & Smiley.
Zaya Younan and his team are astute investors who are able to see where the markets are going before they get there, observed Tom Bohlinger, CBRE. They purchased Sepulveda Center at an attractive price and substantially increased and maintained occupancy by being far more responsive to tenants than many institutional investors. By being a step ahead of the crowd, they've been able to recognize market opportunities and produce exceptional returns for investors.
Most recently, Younan Properties acquired 211 East Ontario, a 172,000-square-foot, Class A high
rise in downtown Chicago, IL bringing the company's Chicago portfolio to more than half a million square feet of Class A office space. In Dallas, Younan Properties is the second largest office landlord, with a portfolio of seven prime properties totaling 3.5 million square feet of Class A office space.
Known for its detailed, hands-on approach to improving operational efficiencies while maintaining top building standards for tenants, Younan Properties' management team has more than four decades of experience in developing and managing commercial real estate in high growth markets throughout the United States. Headed by Zaya S. Younan, Younan Properties has accumulated more than $1.1 billion in real estate holdings since its inception in 2002. The company's national portfolio currently includes 22 Class A office properties totaling more than six million square feet.