Mark Moshayedi, one of Orange County’s best-known tech entrepreneurs, coastal property owners, and classic-car collectors, has a new commercial real estate venture.
And this time, he wants to bring some other financial partners along for the ride.
Moshayedi recently took the wraps off Space Investment Partners, an Irvine-based commercial real estate operating company that wants to buy several hundred million dollars’ worth of property over the next few years.
Deals of $15 million to $250 million would be its sweet spot, initially focused on property in Southern California, but the company plans to soon also target other West Coast markets with growing numbers of tech-savvy businesses and employees.
Space Investment isn’t shy about growth goals.
“We could do a billion dollars (in deals) right now if we found the right ones,” Moshayedi said.
Helping him in the business is co-founder and Managing Partner Ryan Gallagher, who for the past eight years served as a senior managing director and co-head of the Orange County office of commercial brokerage HFF LP.
Gallagher has worked on about $16 billion worth of deals over his career involving an assortment of large real estate companies, real estate investment funds, and wealthy individual investors, including area commercial property sales involving Moshayedi and his family.
Space Investment plans to fund new real estate deals, not just through Moshayedi’s own bank account, but also through other wealthy families looking to buy property and through institutional capital.
“We’re looking to give investors returns in the 15% to 25% range,” Moshayedi said.
PCH Holdings
He made his first fortune through Santa Ana-based computer storage device-maker STEC Inc., which he co-founded in 1990 with brothers Manouch and Mike. In addition to holding more than 50 patents to his name, Mark served as the company’s chief executive for a time.
STEC was sold in 2013 to a unit of Western Digital Corp., then based in Irvine, for $340 million.
Moshayedi remains active in the tech world, serving on the board of Irvine-based cloud-based travel technology company BookingPal.
The Moshayedi family put much of its earnings from STEC into real estate in recent years; Mark’s investments have been run under MSM Global Ventures, while Manouch’s investments are largely consolidated under his MX3 Ventures business.
The family has together invested in most of its area deals through associated investment groups.
It first made real estate headlines through ownership of Shoppes at Chino Hills, a 377,966-square-foot mall in southwest San Bernardino County, paying a reported $94.5 million for it in 2010. The family sold the mall four years later for $147 million in a deal brokered by Gallagher, who was then at HFF.
Closer to home, the family has assembled large chunks of commercial property along the Mariner’s Mile stretch of Pacific Coast Highway in Newport Beach over the past decade, including several blocks’ worth of waterfront property, spending more than $130 million since 2009, according to Business Journal records.
Sites under its control on the ocean side of the highway include the former Ardell Yacht & Ship Brokers building, the nearby Duffy Electric Boat Co. rental store, and the Mariners Mile Marine Center offices.
In December, MSM Global and MX3 filed plans with Newport Beach to redevelop part of their holdings into a mix of uses featuring retail, offices, restaurants and apartments taking up several hundred thousand square feet.
The plans are still in the exploratory stages and will likely be revised; more details are expected later this year.
STEC to STEM
Space Investment plans to search far beyond PCH for opportunities, taking advantage of Moshayedi’s tech knowledge and company executives’ real estate acumen.
The company’s focus is Southern California and other West Coast markets with concentrations of STEM (science, technology, engineering and math) workers and older properties that can be upgraded and modernized to serve the next generation of workers—the main acquisition target for the time being. Industrial, retail, hotel, office and apartment properties are potential candidates.
Space Investment plans to hold on to its value-add investments for three to five years.
Changing demographics and migration patterns favoring the STEM-heavy markets, including Salt Lake City, Seattle and Portland, present plenty of opportunity, though the current real estate cycle is in “the late innings,” according to Gallagher.
“All of these disruptive forces create new opportunities if you know where to look for them.”
Focusing on purchases of value-add buildings rather than investments of more fully leased, stable properties should provide more room for profitability upon the inevitable real estate downturn, which the founders say they believe should be relatively mild compared to the last recession.
A somewhat ornate example of the company’s fixer-upper office investments strategy can be seen at Space Investment’s headquarters near John Wayne Airport.
The 64,000-square-foot industrial building Moshayedi owns on Gillette Avenue recently got a major makeover, about half the property turned into creative-office space capable of accommodating a few dozen employees once the business ramps up operations.
In addition to the co-founders, the management team includes Senior Adviser David Hirsh, a former Blackstone Group executive, and Director of Acquisition Tom Lam, who was most recently with Newport Beach-based Buchanan Street Partners.
Car Connoisseur
In a twist on the creative-office trend, about half of the Gillette Avenue building is being used to display another one of Moshhayedi’s obsessions: vintage cars.
About 10 restored cars, highlighted by a 1965 Shelby De Tomaso P70, are kept in the showroom.
The Peter Brock-designed Shelby was on the cover of the March 1966 Road & Track magazine, according to Moshayedi.
A 1955 Mercedes 300 Sc Roadster is also on display; only 53 of the model were built, fewer than 35 of which remain.
The vehicles make up only part of Moshayedi’s collection, which include several cars worth well over $1 million.
“Cars are a great investment, actually,” and pricier vehicles are the best bet.
He said an ultra-rare, fully-restored car valued at several million dollars is much more likely to hold its value, if not appreciate substantially, than a $100,000 car, whose value is more likely to drop by half, he said.
