Mission Hills-Based Firm Plans to Acquire OC Properties
Mission Hills-based Asset Management Consultants is ramping up its real estate acquisitions in Orange County, which it entered nearly three years ago.
James Hopper, the company’s president, is targeting at least $100 million in commercial real estate purchases this year, around half of which could wind up going toward local commercial and industrial properties.
“Right now, we have brought in enough institutional equity investors to go along with our existing base of private partners to complete much more,” said Hopper. “So if we can find $200 million in projects that meet our criteria, then we’ll move even more aggressively.”
Along with Russ Hardt, who heads AMC’s Costa Mesa-based acquisitions division, Hopper is building up a real estate investment firm that in the mid-1990s focused on helping property owners restructure loans and other forms of debt in a depressed real estate market.
Using their contacts within the banking community to gain financing and form partnerships, AMC has been moving into buying office buildings. The company completed $15 million in acquisitions in 1997. Last year, it bought about $65 million in new buildings throughout Southern California.
During the last quarter, the company formed a joint venture with Property Management Associates of Culver City. The new company, AMC Management Services, will provide property management for all of AMC’s buildings.
PMA, which manages about 200 commercial properties in Southern California, also is pumping more equity into AMC’s acquisitions. The joint venture gives Hopper and Hardt support in due diligence and related property issues that will allow AMC to complete more complex deals, according to company officials.
“We’ve been lining up capital and looking for properties for the past few years,” said Hardt. “It’s all started to come together on the acquisitions side in the past year or so.”
During the past eight months, he added, AMC has made eight acquisitions and built an Orange County portfolio of close to 200,000 square feet.
Besides office properties, AMC is also looking at retail and industrial buildings.
“It just happens that the opportunities we’ve found in Orange County have been office properties,” said Hardt. “But we’re looking for all sorts of investment opportunities.”
In retail, he added, “we haven’t found a combination of good pricing with the right location.”
AMC is looking for properties where rents can be rolled to provide more income. Company managers say they are also looking to takeover older buildings in good locations that can be remodeled and attract higher-paying tenants.
Along those lines, AMC has purchased the former Fidelity Federal Building near the MainPlace Mall in Santa Ana.
AMC paid the LA-based Moss & Associates $9.2 million for the 12-story, 123,000-square-foot office tower.
“Most of the buildings we purchase are off-the-market ones that are not listed,” said Hopper. “We’re looking for properties before they hit the marketplace.”
AMC snatched the Fidelity Federal Building after a previous escrow agreement fell through.
“Two brokers who knew about the situation actually approached us before it went back onto the market,” said Hopper.
Those brokers, Rob Mitchell and Al Pekarcik of Voit Commercial, worked with Grubb & Ellis listing agents Jon Swallow and David Shammas to complete the transaction, he added.
“What appealed to us was not only the building’s visibility to the (I-5) freeway, but the fact that occupancy levels are very high in the area,” said Hardt.
The building also wasn’t kept up as well as AMC thought it could be, he added. The new owners plan to pump $1.5 million into exterior remodeling to attract more tenants to a building that now is 86% occupied.
“We also liked the tenant space, which is smaller,” said Hardt. “We don’t have to go in and do a lot of demolition to accommodate the most active part of the tenant market: smaller firms that are sprouting up all over Orange County. This is a perfect building for the start-up technology companies.”
Although a high-rise, floorplates on the building are only around 9,400 square feet. By comparison, Hardt says, most high-rises in the area offer floors of around 20,000 square feet.
Swallow and Shammas are marketing the space for between $1.70 and $1.75 a square foot for a full-service gross lease.
AMC has also completed several other recent deals, including:
n A medical office building in Huntington Beach with a price tag of $6.5 million.
n A medical center in Lake Forest that cost $2.3 million.
n A two-story office building in Costa Mesa, which was purchased on a ground lease. With improvements, the deal totaled more than $1 million, according to Hardt.
“This year, we expect to produce at least three to five more acquisitions in Orange County,” he said. “Our target is to own around 400,000 to 500,000 square feet by the end of the year.”
AMC is also on the verge of completing two other deals:
n A three-story R & D; building along Mission Avenue in Pomona. AMC is buying the 242,000-square-foot facility for $13 million from Hughes Avionics. “It was originally built by General Dynamics in the mid-1980s and sold to Hughes,” said Hardt. “Now Hughes wants to divest itself of that real estate.”
n A 21,000-square-foot office building at 1191 Fairway Drive in the city of Industry. AMC bought it for $2.2 million from a CPA firm that occupies the building’s second floor. n
