IRA Realty Capital saw a $6 million gain late last month when it sold a Pasadena medical office property it acquired just last year.
While it might scream “flip,” the five-year-old Newport Beach private equity firm was approached by a partnership led by Tucson, Arizona, real estate investment firm Holualoa Cos. interested in the Thatcher Medical Building at 960 E. Green St.
They buyers shelled out almost $28 million, or roughly $400 a square foot, for the 73,600-square-foot class B medical office building, designed in the New Orleans colonial style. The off-market deal was completed without brokers.
IRA paid $21.6 million, just under $300 a square foot, when it bought the property in March of last year.
“We decided to sell after we got an unsolicited offer and felt it was a good return for our investors,” said Jay Gangwal, a principal at IRA. “I think we were well on our way towards stabilizing and reselling the asset in the first quarter of next year.”
When IRA purchased the building, it was only 78 percent leased, according to a company memo. The firm put in a new management team and amped up leasing efforts. It is now 94 percent leased, according to data from CoStar.
Holualoa did not respond to requests for comment.
Gangwal said the firm made the purchase in partnership with a local developer Patrick Chraghchian could not be reached for comment.
“There is potential development opportunity… so we felt like we were leaving money on the table, which we were OK with,” Gangwal said.
This is not Holualoa’s first purchase in Los Angeles. The firm bought the Pacific Center in downtown LA’s Central Business District for $36 million, or $90 a square foot, in 2003, and sold it two years later after making improvements for $66.3 million, or $160 a square foot.