Oaktree Capital Management President buys Fender Headquarters for $29.85m

--> VIZZDA—December 17th, 2012 — Bruce  Karsh of Oaktree Capital Management has purchased The FNBA Building in the Perimeter Center Business Park from WDP Partners. The building is the current headquarters for Fender Musical Instruments, and was formerly the headquarters for First National Bank of Arizona. 

The two-story office building is located West of the Southwest corner of Princess Road and Loop 101 at 17600 N Perimeter Drive in Scottsdale. Documents filed with the SEC list the building at 127,690 ft², though broker marketing materials place the structure at 137,000 ft². The property was built in 1999 on 10.39 acres zoned I-1. It has an approximate parking ratio of 5.26:1000 ft². Fender signed an 134-month lease (eleven years and two months) with two 5-year options to extend for 110,875 ft² on September 9th, 2011. The rents and escalations are as follows:

Months	Annual Basic Rent per RSF
0-14	0
15-98	23.80
99-134	24.5

Fender Filed an S-1 Registration declaring their intent to issue shares to the public on March 8th, 2012 with JP Morgan Chase as lead underwriter. An amended S-1 was filed on July 10th, 2012 detailing a $200m maximum amount raised on 10,714,286 shares issued, including 3,571,429 shares from Michael Lazarus, principal of Weston Presidio. Fender withdrew it's registration on August 8th, 2012.

Oaktree acquired the property for $29.85m or $277.33 per ft²; they paid $12.35m in cash, and secured $17.5m new debt with JP Morgan Chase maturing January 1st, 2023. First National Bank of Arizona (FNBA) previously acquired the property on May 1st, 2003 as 16.64 acres of vacant land for $19.484m or $142.22 per ft² and $19.6m new debt with California Bank and Trust; Metros Credit Card Services was a sub-lessee at the time.

FNBA refinanced the property several times, including $14.5m in new debt issued April 28th, 2005 with Countrywide, maturing May 8th, 2015 and having a 5.56% interest rate. This note was securitized September 1st, 2005, and assigned to Wells Fargo Bank CMBS. The $19.6m original note was released May 11th, 2005. FNBA merged with First National Bank of Nevada (FNBN) June 30th, 2008 prior to the closure of FNBN by the FDIC on July 28th, 2008. 

A court order appointing a receiver to the property was approved and it was concurrently sold to WDP Partners on November 22nd, 2010 for $10m or $72.99 per ft. While the amount down was not listed on the affidavit, WDP Partners secured $5,460,000 new debt at 18% interest with National Bank of Arizona. The $29.85m sales price represents a 99.25% annualized rate of return for WDP Partners.

By:

Daniel Alpers

Director of Planning and Municipal Solutions

Paul Dionne
Director of Analytics
Vizzda.com