In June 2002, Kearny purchased, at a significant discount, a $55 million sub-performing loan secured by the leasehold interest in Heritage Corporate Center. Kearny bought the loan from an institutional lender and closed the transaction six business days after signing the Purchase and Sale Agreement. Within six weeks Kearny and the borrower signed a consensual agreement whereby Kearny took ownership of the property. Kearny owned the property with Morgan Stanley between 2002–04 and managed it until 2006.
Heritage Corporate Center is a mixed-use business park comprised of 23 buildings totaling 724,154 sf in Santa Fe Springs, California. It is located at the intersection of Telegraph Road and Norwalk Boulevard near the junction of the San Gabriel (605) and Santa Ana (5) freeways.
As owner between 2002–04, Kearny invested more than $3 million in improvements, renegotiated and simplified the ground lease with the City, lowered operating expenses, and signed more than 320,000 square feet of new leases and renewals, including extending the largest tenant, the County of Los Angeles, for eight years. This successful execution enabled Kearny to sell Heritage Corporate Center in 2004 for a significant profit.
In March 2016, Kearny assisted Morgan Stanley in the re-acquisition and will asset and property manage the property with a long-term hold outlook. Kearny and Morgan Stanley were attracted to the business park’s stable tenancy and strong cash flow. Kearny is planning on adding a number of sustainability measures and managing the property to enhance the tenants’ experience and maintain the success of the business park. Kearny and was able to reduce controllable expenses by 15% from the park’s prior owner through proactive management.