Layton-Belling Launches $215M Real Estate Fund
By MATHEW PADILLA
Newport Beach-based real estate investor Layton-Belling & Associates has raised $215 million for a new fund to buy buildings in and around Orange County.
Layton-Belling plans to use the money and take out 60% debt to buy buildings, pushing up the fund’s buying power.
“LBA will have the ability to acquire $600 million worth of quality office and industrial properties,” said Phil Belling, the firm’s managing principal. “We are focusing primarily in Southern California.”
Backers of the fund include institutional and wealthy investors. Belling declined to name them but said the fund has more than 30 investors.
The new LBA Realty Fund already has one buy under its belt.
Layton-Belling paid $58.5 million for The Concourse, a 667,000-square-foot office and industrial complex in Industry. Rick Putnam and Jeffrey Cole of Trammell Crow Co. handled the buy.
Layton-Belling recently closed another fund, LBA Industrial Fund I, which focused on buying industrial buildings. Layton-Belling still manages the fund, which bought 15 properties worth more than $180 million in the past 12 months.
A third of the industrial fund’s holdings are in OC, including the 106,000-square-foot East Anaheim Distribution Center, according to Layton-Belling. The firm paid $7 million for the industrial park, which is fully leased.
Layton-Belling manages five funds and has investments in three. The firm has a stake in its new fund.
Belling and Steve Layton started Layton-Belling in 1991, after leaving The Koll Co. The investors earned a reputation in the 1990s as savvy asset managers and developers, buying property during an economic slump and enjoying hefty returns as the market rebounded.
“It seems like they are doing it all over again now that the office market is a little soft,” said Gary Stache, senior vice president with the Newport Beach office of CB Richard Ellis Inc.
Several brokers and other investors have said that property prices are high these days as a result of low interest rates. Investors have been buying because it’s so cheap to get debt, sources said, pushing up prices.
“I personally believe that many people buying real estate in the past year or two in this market overpaid,” said David Colton, president of Irvine-based The Colton Co.
Colton also runs real estate investment funds. He’s been more aggressive in Arizona and Texas, where he said prices are more reasonable.
Officials with Layton-Belling said the market is competitive but they’re in no hurry to buy. The parameters of their new fund allow them to invest selectively in the next three years.
“Part of LBA’s success to date has been its flexibility in acquiring a wide range of office and industrial properties throughout Southern California from as low as $5 million to as large as $100 million,” said David Thomas, a principal with the firm.
During the 1990s, Layton teamed with Boston pension fund adviser AEW Capital Management LP on building buys. In 1998, Layton-Belling sold a big chunk of property to Beverly Hills-based Arden Realty Inc. Arden, a real estate investment trust, bought 50 buildings totaling some 5.2 million square feet of space for $615 million.
Today Layton-Belling manages 5.5 million square feet of commercial space, half in OC, according to firm officials. Its existing portfolio is worth about $500 million, they said.
