A high-end Santa Ana industrial building has been sold out of receivership for about half of what the property traded hands for near the peak of the market.
Lakewood, Colo.-based Alliance Commercial Partners LLC recently closed on the buy of 2001 E. Dyer Road, a 366,471-square-foot building off Red Hill Avenue, near the stalled Tustin Legacy development.
The building sold for $23 million, or about $63 per square foot, according to Newport Beach’s California Real Estate Receiverships, which had been managing the distressed building and handled the sale.
The building sold for more than $46 million in 2007 in one of the priciest industrial sales in Orange County at the time.
The building since has struggled with low occupancy. It went into receivership in April.
The prior owners—a partnership led by Wilton, Conn.-based Commonfund Realty Inc.—had placed the property in bankruptcy last summer in a failed bid to hold on to it.
Alliance Commercial is a privately held investor that owns about 10 properties in California, according to the company’s website.
It owns one other local property—a five-building industrial park in Fullerton that totals more than 360,000 square feet.
The company’s looking to buy another $125 million to $150 million of industrial and office space this year, said Bob O’Neill, Alliance Commercial’s Irvine-based director of acquisitions.
The Santa Ana building saw plenty of interest and was bought with cash. Minneapolis-based CarVal Investors teamed with Alliance Commercial in the buy.
“Some 20 offers were made, including parties who wanted to use the building as a corporate headquarters,” said Bill Welch, an agent with California Real Estate Receiverships who worked on the court-overseen sale.
The receivership sale eliminates the need for a foreclosure sale that had been slated for Feb. 28, according to court records.
Plenty of Work
Alliance Commercial has plenty of work to do. The site is about 3% occupied, according to O’Neill.
In prior years, the building has been occupied by GT Bicycles Inc. and logistics company 3 PL Global LLC, among others.
It was renovated in 2001 and counts some office space along with data center uses, in addition to warehouse space.
The plan is to make some more renovations and market the building as a potential home to two large tenants, according to O’Neill. Grubb & Ellis Co.’s Scott Read and Jeff Read are handling marketing.
If a company wants to buy the building for its headquarters, Alliance Commercial would consider selling, O’Neill said.
Leasing is the company’s focus for now. O’Neill said he believes market trends are on the landlord’s side.
For companies looking for warehouse space in the 200,000-square-foot or larger range, there are just a handful of available options in the area.
The tightened market in that range follows a flurry of high-profile leases in recent months that took a number of empty buildings off the market.
For the 122 industrial buildings in OC larger than 200,000 square feet, vacancy rates now run a little more than 5%, according to the latest data from Newport Beach’s Voit Real Estate Services.
It’s the second time that O’Neill has been involved in a buy of the Dyer Road property in the past five years.
While working for Chicago’s First Industrial Realty Trust Inc., O’Neill headed up the company’s $38 million buy of the building in late 2006.
First Industrial made a quick profit on that deal, selling it in mid-2007 for about $46.5 million to CFRI/Greenlaw Dyer Road LLC, led by Commonfund Realty and including Newport Beach’s Greenlaw Partners.
By early 2008, the property—which was 30% full at the time—had been refinanced by its prior owners to a $32.8 million loan made with California National Bank, according to court records. California National was taken over by the Federal Deposit Insurance Corp. in late 2009.
The loan was turned over to U.S. Bank, which in early 2010 declared the borrowers in default after payments were stopped.
Officials with California Real Estate Receiverships, one of the larger receivership groups on the West Coast, were placed in charge of the property early last year.
A planned sale was considered soon after the appointment of the receiver but was postponed after the borrowers placed the property in bankruptcy last summer, according to Welch.
A settlement with Commonfund was reached a few months ago, clearing the way for the sale.
