Rexford Industrial on SoCal Market

Kelsi Maree Borland of GlobeSt.com conducted an exclusive interview with Howard Schwimmer and Michael Frankel, the co-CEOs of Rexford Industrial, to discuss their firm's recent transactions in Southern California and their current take on the industrial market. Just this month Rexford announced the acquisition of two industrial properties for $15.4 million, another two for $29 million, along with first quarter financials which reported the Q1 acquisition of four industrial properties, totaling approximately 432,000 square feet, for an aggregate cost of $52.4 million. An excerpt of the Q&A follows:

GlobeSt.com: Are there markets within Southern California to which you are particularly attracted?

Frankel and Schwimmer: Well, 70% of our portfolio is located in L.A. and Orange County, but we are looking for opportunities in all of the markets that I mentioned. We do have a higher concentration in the San Fernando Valley, where we have close to 3 million square feet of our portfolio. That market has been a good performing market for us.

GlobeSt.com: As you mentioned, this is a very competitive industrial market and you are focusing on high barrier to entry areas. How are you finding and winning deals?

Frankel and Schwimmer: Today, a lot of the deals that we do have a value-add component to them, and a lot of times we see things that a lot of other buyers don’t. We have three licensed contractors on our staff, so we are always looking at how to create value, and in doing so we are often able to secure the deal ahead of other buyers because we are able to create stronger cash flows.

GlobeSt.com: Where do you see the Southern California market over the rest of the year?

Frankel and Schwimmer: I think it is going to continue to be strong from a fundamental standpoint, with high occupancy and growing rental rates and property values. It is a huge market and it is very fragmented in terms of ownership, so there is always a lot of opportunity in terms of buying assets, whether they are core deals or value-add. We are excited about the market, and we think there is still a lot of opportunity on the rental side in terms of the product that we focus on, and our ability to grow rents in the product that we are buying.

For more news and information visit Blumberg Partners.

CA Selects Buyer for State Buildings at $2.3B

According to an Associated Press article the Department of General Services in California has selected California First LLC, a partnership led by Hines and Antarctica Capital Real Estate, as the buyer for 11 state office properties that went up for bid earlier this year with a winning offer of $2.33 billion. The sale will result in more than $1.2 billion for California's state general fund and $1.09 billion to pay off bonds on the properties. Over the next 20 years, the state will reportedly lease the offices back from the new owner at predetermined rates, and will no longer maintain, operate, or repair the buildings. All the leases with California First allow the state to buy back any or all of the buildings at anytime during the 20-year term. The offices included in the portfolio are:
  • Attorney General Building, Sacramento
  • California Emergency Management Agency Building, Sacramento
  • Capitol Area East End Complex, Sacramento
  • Elihu M. Harris Building, Oakland
  • Franchise Tax Board Complex, Sacramento
  • San Francisco Civic Center, San Francisco
  • Junipero Serra State Building, Los Angeles
  • Department of Justice Building, Sacramento
  • Public Utilities Commission Building, San Francisco
  • Judge Joseph A. Rattigan Building, Santa Rosa
  • Ronald Reagan State Building, Los Angeles

"Far from a fire sale, this was a stiff, multiple-offer competition that generated favorable pricing for the state," Kevin Shannon, vice chairman of CB Richard Ellis, which brokered the sale, said in a written statement. Rich Mayo, one of the chief investors, said California, despite its financial problems, is a reliable investment. The state is not a tenant prone to "run out on leases or anything," he said in a Sacramento Bee article.

For more news and information visit Blumberg Capital Partners.

A&B Sells Distribution Center for $43M

A&B Properties, Inc., the real estate subsidiary of Alexander & Baldwin, Inc.,has announced the sale of the Ontario Distribution Center for $43 million according to a BusinessWeek article. The 898,400 square-foot, three-building industrial park sits on a 38 acre plot in Ontanrio, California and was originally purchased by A&B for $27 million in 2000. Major tenants include Home Depot, Best Furniture, Quill Corp., and Crothall Laundry Service.

Norbert Buelsing, president of A&B Properties said, "We achieved an exceptional 97 percent average occupancy during our 10-year ownership and realized favorable pricing for the property. Consistent with our real estate investment strategy, we anticipate reinvesting the proceeds from this sale, through a tax-advantaged 1031 transaction, into other commercial real estate investments with good growth prospects."

For more news and information visit Blumberg Capital Partners.