Irvine-based Stillwater Investment Group, an investor in office, industrial, apartment and retail properties that began operations in 2014, has made its largest acquisition of the year in one of the most prominent office properties in the city of Riverside.
It headed an investment group that bought Towers at Riverwalk, a two-building office project just off the Riverside (91) Freeway about three miles east of the Corona (15) Freeway.
The four-story offices total about 193,642 square feet and are 98% leased to various tenants, including Tustin-based SchoolsFirst Federal Credit Union, the country’s largest credit union for school employees, which has a regional office, call center and a retail branch there.
The property is part of Turner Riverwalk, a 73-acre business park with offices, research and development and industrial space, medical office buildings, retail space and a hotel.
The buildings sold for a little under $38.3 million, or $197 per square foot.
Newport Beach-based Davenport Partners sold the offices, which it had owned since 2011. The property was built in 2008 by Turner Development, another Newport Beach-based firm that headed development of the business park and now operates as Turner Real Estate Investments.
CrossHarbor Capital Partners, a Boston-based investment firm with an office in Newport Beach, was Stillwater’s equity partner in the acquisition. Irvine-based real estate investor Greenlaw Partners was also part of the investment group.
Stillwater founder John Drachman previously worked for Greenlaw Partners, one of the most active buyers of value-add properties in Orange County.
$250M+ in Deals
The Riverside deal brings Stillwater’s investments past the $250 million mark since its inception. It’s also made deals in the San Gabriel Valley, Long Beach, and elsewhere in the Inland Empire, some of which involved CrossHarbor and Greenlaw as partners, including its one big OC office acquisition, the QLogic Corp. campus in Aliso Viejo.
It paid about $36 million for the three-building, 161,000-square-foot QLogic campus, which includes about 2.5 acres of excess land that could hold additional development.
The Aliso Viejo campus will be vacated this year. San Jose-based Cavium Inc. acquired QLogic in August for nearly $1.4 billion and is moving the company’s local operations to a four-story office Irvine Co. is building in the Irvine Spectrum area.
Stillwater is working on plans to rebrand the Aliso Viejo campus and plans to redevelop the soon-to-be vacated offices. It’s already received some interest from potential tenants, according to Drachman.
The recent Riverside acquisition is a different type of investment for Stillwater than its OC deal, he said.
“We thought it was wise to offset some of the risk” in terms of leasing out the Aliso Viejo property.
Riverside’s office market encompasses about 5.2 million square feet, and vacancy rates have fallen from 10.2% over the past year to 9.9%, according to brokerage data from Avison Young. Monthly rents in the city average about $2.05 per square foot, according to the brokerage’s first-quarter market report.
“It’s a great opportunity to buy a well-leased property, given where we are in the (real estate) cycle,” Drachman said.
