Spieker Selling Stadium Plaza Business Park
As part of an effort to reallocate capital in the search for better returns, Spieker Properties is marketing its roughly 800,000-square-foot Stadium Plaza Business Park in Anaheim.
“We’re doing some more disposition in order to create some trade capital and then we can hopefully buy other (properties),” said John Davenport, president of Spieker Properties’ Southern California Region. “Industrial is in great demand right now on the part of institutional advisors and institutional owners. That’s why we’re selling Stadium Plaza. We love the project.”
Although it is not the first complex to be sold by Spieker Properties, the move is still a marked departure for the Menlo Park-based real estate investment trust, which over the past several years has been one of the most aggressive acquirers of Orange County and Southern California real estate.
John Lutzius, a senior analyst with Newport Beach-based Green Street Advisors, one of the nation’s most influential and respected firms in REIT analysis, said many REITs talk about reallocating capital, but few actually follow through.
‘Recycling’ in Vogue
“It’s fairly common for REITs to talk about this,” he said. “The buzzword is ‘recycling capital,’ and it’s the idea that if you have assets that have very limited upside remaining in them, why not sell them into a strong private market and then take the proceeds and redeploy them into assets that have better growth prospects.”
The main reason for recycling capital is that REITs are no longer running to Wall Street, as they have in the past, to issue more stock and raise capital for additional acquisitions. Because REITs are out of favor,Green Street Advisors tracks about 70 REITs and estimates that they are trading at a 12% discount to their net asset value, or the true underlying value of the real estate they hold,many firms would prefer to sell assets they believe have peaked or are close to peaking in value.
Davenport acknowledged this is the driving factor behind Spieker Properties’ decision to sell Stadium Plaza Business Park, a complex of industrial buildings off of the 57 freeway near Katella Avenue.
“Our stock prices are lower and to the extent that we feel our stock is relatively undervalued,” Davenport said. “We don’t think it makes sense to issue more stock to raise equity, because in essence we’re selling our company below what we think the underlying value of the company is.”
Spieker Properties has undertaken a similar approach with other properties on the West Coast, most notably in the Seattle area, where it is selling a portfolio of properties to Hackensack, N.J.-based RREEF Funds. The proceeds for that sale are being reinvested in that market.
Similarly, Davenport said he hopes to use the proceeds from the Stadium Plaza Business Park locally.
Reinvestment on Horizon
“Our company’s first priority would be to reinvest in the markets where we sell,” he said. “That’s our first priority, but we also have to look at where the best opportunity for finding good acquisitions are.”
As with an increasing number of high-profile projects, Spieker Properties has not put a price on the property, instead sending out investment packages to potential buyers. Such tactics are designed to create an auction environment.
Brokers expect the Stadium Towers Business Park property to fetch between $60 million and $70 million.
Louis Tomaselli, a broker with Voit Commercial Brokerage’s Anaheim office, expects the property to receive a lot of attention.
“It’s ground zero as far as north Orange County and probably one of the most recognized business parks in Orange County,” he said. “There’ll be a number of institutional buyers lining up to purchase that property.”
