San Francisco-based pension fund adviser RREEF and Spieker Properties Inc. have a pricey game of tag going on in Anaheim.
RREEF has agreed to buy back the 800,000-square-foot Stadium Plaza Business Park in Anaheim from Spieker Properties for a little more than $60 million. RREEF originally sold the park in the shadow of Edison International Field to the Menlo Park-based real estate investment trust in 1986.
Scott Stuckman, RREEF’s vice president of acquisitions for Southern California, said the investment firm is buying back a property it reluctantly parted with more than a decade ago.
“Both times that property has been sold it’s been sold by a reluctant seller,” he said. “We were a reluctant seller and they are a reluctant seller.”
RREEF was forced to sell the property in 1986 because of the specific partnership agreement under which it owned the complex. The pact called for liquidation of the portfolio after a set period of time.
Stadium Plaza tenants include RREEF itself, MCI WorldCom Inc., AST Sportswear, an Anaheim-based apparel maker, and DEC Associates, a producer of specialty building materials whose headquarters is in the complex.
Spieker is selling the property as part of its efforts to generate cash to buy new properties.
“We’re doing some more disposition to create some trade capital,” said John Davenport, president of Spieker Properties’ Southern California region, when the Stadium Plaza was first listed a few months ago. “We can hopefully buy other (properties). That’s why we’re selling Stadium Plaza. We love the project.”
Because of tax issues, escrow on Stadium Plaza will be closed in two or three phases, Stuckman said. Meanwhile, a co-management pact between Spieker and RREEF will govern the property. Spieker and RREEF executives have done business together in the past, he said.
“That prior experience helped in securing the transaction,” he said.
John Lutzius, a senior analyst with Newport Beach-based Green Street Advisors, said many REITs talk about reallocating capital, but few actually follow through.
“It’s fairly common for REITs to talk about this,” he said. “The buzzword is recycling capital. 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.”
Increasingly, REITs are looking to sell properties in favor of acquiring new ones in part because of relatively low valuations on Wall Street.
Davenport, in a prior interview, said Spieker’s market valuation is a driving factor behind its decision to sell Stadium Plaza Business Park, a complex of industrial buildings next to the Orange (57) Freeway near Katella Avenue.
“We feel our stock price 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 likely will use the funds from the sale of Stadium Plaza Business Park to acquire other properties in Southern California.
