Ducommun Inc., a Santa Ana-based supplier of electronic and structural products and services for the aerospace and defense industry, says a recent industrial real estate transaction in the South Bay area of Los Angeles County has helped set the company up for a successful 2022.
The nearly $600 million-valued firm (NYSE: DCO) at the end of December completed a sale-leaseback transaction with an affiliate of Oak Brook, Ill.-based CenterPoint Properties for the company’s nearly 17-acre “performance center building” and excess land along Gardena Boulevard in the city of Carson.
The roughly 307,000-square-foot property traded hands for $143 million, or roughly $465 per square foot. Ducommun said the all-cash deal generated a gain of $132 million, and about $110 million in net after-tax cash proceeds.
CenterPoint Expands
The deal adds another significant industrial property to the SoCal portfolio of CenterPoint, which owns two of the largest industrial buildings in OC: the Albertsons Cos.’ and former J.C. Penney Co. hubs in Irvine and Buena Park, respectively.
The latter property, bought a few years ago, has been converted into the CenterPoint SoCal Logistics Center, a 1.1-million-square-foot industrial facility that’s now fully spoken for.
In late 2021, CenterPoint paid an additional $114 million for a three-building logistics facility in Santa Ana.
The 20-acre site includes three regional distribution buildings spanning 400,000 square feet at 2701, 2711 and 2721 S. Harbor Blvd.
CenterPoint officials said they spent over $750 million in Southern California since the start of 2021.
Taking Advantage
“Industrial properties in the Southern California market are in extremely high demand right now, and the company is taking full advantage of it,” Stephen Oswald, chairman, president and chief executive of Ducommun, said at the time of the Carson deal’s closing.
“The completion of this transaction will bring significant value to the company and its shareholders by monetizing a portion of our legacy [California] owned real estate portfolio.”
Ducommun reported occupying 27 owned or leased facilities, totaling 2 million square feet of manufacturing area and office space, as of a year ago.
The Carson building was its largest facility at the time; its next largest is a 274,000-square-foot facility it owns in Monrovia, according to regulatory filings.
In the company’s latest annual report filed in late February, Ducommun reported that it will be leasing back the Carson site for at least five years, with three additional options to renew in five-year increments.
For the first five-year period, the company is expected to pay rent of $19.6 million, which equates to monthly rent in the $1.05-per-square-foot range.
East Coast Acquisition
Ducommun said it used a portion of the proceeds from the real estate sale to buy Rhode Island’s Magnetic Seal Corp., a provider of “high-impact, military-proven magnetic seals for critical systems in aerospace and defense applications.”
It paid $69.5 million for the business at the end of 2021, according to recent regulatory filings.
2021 “was a return to growth story for Ducommun and I’m pleased with how much we accomplished along with positioning the company for continued success in the years ahead,” Oswald said in late February, noting the company’s real estate transaction, completed “at record prices,” will help fuel growth and strengthen the company’s balance sheet.Â
