Chuck Klein, Kevin Held
Cassidy Turley San Diego
Encinitas Village Square I, 1446-1486 Encinitas Blvd., Encinitas
25,810 square feet on 112,385 square feet of land
Total consideration: $9.25 million
About the property:
This is a “generational” trophy type of property (on the corner of Encinitas Boulevard and El Camino Real) that rarely, if ever, sells, maybe once every 50 years. The sale included combining both the land and improvements, which is also a rare type of transaction necessary to get both sides to agree on a price.
This sale represented the first time in approximately 50 years in which the fee interest in the land has transferred to a new owner. Prior to the close of escrow, the improvements (owned by the client) were subject to a ground lease with the estate of the former land owner, which consisted of four siblings who had never in the past been in full agreement, or willing to sell at a realistic market value.
Closing the deal:
The agents were able to bring in a buyer off-market for the combination of both the land and improvements to provide a price that both convinced the land owner to sell, as well as the owner of the improvements as a package. However, that sale was not completed given the significant amount of deferred maintenance discovered during the property inspection: The amount and scope of the work was too much to overcome to get the initial transaction closed, but opened the window for another opportunity.
The land owner was then committed to selling if they obtained the price they desired. They then secured a 1031 back-up buyer (who initially had said the price was too high) after the brokers established a strike price with the first buyer.
Given that the ground lease had only 18 years remaining, which limits any landlord’s incentive to make large capital investments into the property, and the amount of deferred maintenance, the team gave full disclosure of the aforementioned issues. The first buyer they had under agreement passed, so the clock was ticking to secure a buyer. The team continued to market the property and were able to generate five additional back-up offers and push up the value.