Low interest rates and a booming housing market have helped Tustin-based mortgage lender New American Funding become one of Orange County’s fastest-growing private companies the past few years, hitting $1.4 billion in revenue for the 12 months ending in June 2021, a more than 300% boost over 2019 levels.
The company’s founders, Rick and Patty Arvielo, have found recent success on the commercial real estate front, too.
The duo recently sold, at a big profit, a high-end manufacturing and office building along Myford Road that’s a few doors down from its headquarters, which it also owns.
An affiliate of real estate developer and investor Hines paid $50 million, or roughly $445 per square foot, for the 112,400-square-foot building, dubbed the Radius.
It’s the biggest commercial property sale in Tustin in over two years, according to data from real estate market tracker CoStar Group Inc.
The Arvielos paid $22.5 million for the building at the end of 2017, property records indicate.
“This was a classic case of getting an offer I could not refuse,” Rick Arvielo, New American’s CEO, told the Business Journal.
Avid Expansion
The Radius building counts a fast-growing public company as its core tenant.
Tustin’s Avid Bioservices Inc., a contract manufacturer (Nasdaq: CDMO), uses the facility and others in the immediate facility for its drug manufacturing operations, warehouse space and headquarters.
Avid develops and manufactures biologics, or mammalian cell cultures, for biotechnology and pharmaceutical companies. It currently employs about 280 workers in the area and recently completed an expansion to its local manufacturing facilities (see story, this page).
The company’s seen its stock price rise about fivefold since early 2020, and now counts a market cap over $1 billion. Despite a dip in price since the start of the year, its stock is still among the best-performing of an OC-based public company over the past two years.
In December, Avid reported second-quarter revenue for fiscal 2022 above $26 million, up 24% compared to the same period a year ago.
The healthcare company had previously occupied some 84,000 square feet of space at the just-sold Myford Road facility, and took over the rest of the space last summer, CoStar records show.
New American had used that remaining 28,000 square feet for its own operations before Avid expanded.
“We were able to move our folks around between our building on Red Hill and our corporate office on Myford,” Arvielo said.
The New American founders have bought at least eight buildings since 2013, including its space on Red Hill Avenue in Santa Ana. Outside of OC, they’ve bought properties in Riverside, Temecula, Las Vegas and Texas.
Street of Gold
A one-mile stretch of Myford Road has been one of the more notable addresses in OC the past year or so.
That portion of the street, which straddles Irvine and Tustin, near Jamboree Road and the Santa Ana (5) Freeway, holds the headquarters of Rivian Automotive Inc. (Nasdaq: RIVN). The EV maker’s nearly 186,000-square-foot headquarters is on the Irvine side of the road, and it has another sizeable facility just off Myford Road in Tustin (see story, page 3).
A nearly 220,000-square-foot industrial building is now under construction nearby, at 14451 Myford. The Tustin development site sits between New American’s headquarters, which runs about 83,000 square feet, and the building that Hines acquired.
Irvine-based industrial developer Panattoni bought the nearly 7-acre site about a year ago for $32.4 million and has since razed the prior building at the property, which is now seeing construction.
The street is also the home to one of OC’s larger multi-brand apparel companies, La Jolla Group Inc. Execs with ties to La Jolla this month launched a $165 million SPAC or special purpose acquisition company called Revelstone Capital Acquisition Corp.
Hines Activity
Hines’ interest in the Radius building is via a new fund it launched in mid-2021, called the Hines U.S. Property Partners or HUSPP fund.
The commingled fund is reported to have $750 million of equity, which includes a $100 million investment from Hines.
The firm said at the fund’s launch that it would be “targeting next-generation assets in top-performing submarkets in major U.S. markets,” in a mix of property types. It said it aims to buy “core assets of the future.”
The Tustin buy comes an active investment period for various Hines-led ventures in Southern California, with numerous deals inked in the region since December.
A different Hines fund recently bought a site in Santa Ana where an 82,000-square-foot industrial property will be built; see the Jan. 24 print edition of the Business Journal for more on that deal.
Avid’s Tustin Expansion Moves Ahead
Avid Bioservices Inc. this month said it had completed the first of several planned expansions to its local manufacturing operations, which in total could more than triple its annual revenue generating capacity when built out.
As of mid-2021, the Tustin-based contract manufacturer leased about 158,000 square feet of office, manufacturing, laboratory, and warehouse space in multiple buildings along Myford Road and Franklin Avenue in Tustin.
Two of the buildings, including the one just purchased by Hines (see story, page 1) are dedicated to manufacturing biologics, the company said.
It’s in the midst of expanding those manufacturing facilities, with the first of two phases of construction—featuring a new downstream processing suite or DSP—now complete and operational as of this month, according to Nick Green, who took the helm as Avid’s chief executive last July.
A DSP refers to refers to “the recovery and purification of a drug substance from natural sources, such as animal or bacterial cells,” according to device maker Mettler Toledo.
The cost of the multiyear expansion in Tustin for the company has been estimated to be in the $50 million or so range.
According to Green, the Tustin expansion is expected to increase Avid’s annual revenue generating capacity to $270 million. It reported about $57 million in revenue for the six months of its current fiscal year, ending Oct. 31.
“With the continued strong growth that we have experienced in both revenue and customer demand in recent months and quarters, we feel that Avid is in a strong position to kick off the second phase of our Myford facility expansion,” Green said at the time of the Jan 10 announcement.
The company “[looks] forward to delivering those customers the same reliable, high-quality services that our customers have come to expect from Avid,” he said.
Costa Mesa
Elsewhere in OC, Avid late last year announced plans for a new 53,000-square-foot manufacturing facility a few miles away in Costa Mesa. It will be used to produce viral vectors which will be used for oncology, hematological disorders and rare disease purposes.
The facility is expected to cost up to $75 million to build out, and open in 2023.
With the addition of the viral vector industry, Avid’s total annual revenue generating capacity is anticipated to grow to approximately $350 million.
