A real estate investment trust in Denver has bought a big distribution center in Anaheim in one of the most expensive deals on record for an older industrial property in North Orange County.
DCT Industrial Trust Inc., whose market value is about $5.2 billion, closed late last month on the buy of 3454 E. Miraloma Ave., a 300,000-square-foot building near the Riverside (91) Freeway.
The building is near the headquarters of retailer Pacific Sunwear of California Inc., a previous owner that used it as a distribution center. PacSun sold it in late 2008 for a reported $24.5 million.
The 15-year-old building went for a much higher price this go-around. DCT paid about $56.6 million, or nearly $189 per square foot. It’s the highest reported square footage price for an older North OC building larger than 200,000 square feet, according to CoStar Group Inc. records.
The property was sold by an affiliate of New York-based TIAA-CREF Investment Management LLC in a deal brokered by CBRE Group Inc.’s Ryan Peterson, Brad Bierbaum and Darla Longo.
The facility is leased to Kuehne & Nagel, a Germany-based logistics company that moved there last year on a short-term lease.
Prospects of higher rents, either in a lease extension for Kuehne & Nagel or for a new tenant, were the main factors drawing DCT to the property, according to CBRE’s Peterson.
“There’s an absolute lack of supply for quality, sizable inventory” in North OC’s industrial market, he said. “DCT is bullish that they can push the rents.”
Monthly rental rates for large area industrial buildings are now about 70 cents per square foot, Peterson said.
North OC industrial vacancy rates are under 2%, and rents are up more than 10% year-over-year, according to CBRE.
DCT owns other OC buildings, and has a local office in Newport Beach. Its Southern California portfolio stood at 48 properties totaling 8.8 million square feet at the end of last year and was 99% leased. Monthly rental rates averaged about 40 cents per square foot, according to regulatory filings.
The company alluded to the Anaheim deal in its latest earnings call early last month, when executives said they anticipated completing between $50 million and $100 million in acquisitions in the current quarter.
“We believe each of (the) transactions will enhance our portfolio and cash flow growth potential,” Chief Financial Officer Matt Murphy told analysts.
No. 2 This Year
The DCT deal is the second largest industrial transaction reported in OC this year. The largest was the $131.3 million sale of J.C. Penney’s former distribution center in Buena Park, which sold for about $121 per square foot to Chicago-based investor Centerpointe Properties.
The largest area industrial sale on a per square foot basis in the past year came in October in the $188 million trade of seven recently finished buildings at Anaheim Concourse, the 80-acre industrial project next to the just-sold Miraloma Avenue building.
The buildings were sold by Newport Beach-based Panattoni Development Co. and its JV partner Clarion Partners and bought by real estate investment adviser Bentall Kennedy for about $195 per square foot.
The sale of the one-time distribution center of PacSun comes as the retailer is looking to sell its 180,000-square- foot headquarters next door at 3450 Miraloma Ave. A deal for the office, which is being marketed for sale by Newmark Knight Frank, hasn’t been announced and is unrelated to the DCT’s transaction.
