Irvine-based CIP Real Estate is preparing for a year of acquisitions after wrapping up 2011 with a string of sizeable industrial sales.
The real estate investment and management company should make upward of $100 million in commercial property buys this year, according to principal Eric Smyth.
CIP—whose existing portfolio is located in Southern California, Nevada and North Carolina—is eyeing “value-add” industrial and office properties in all its core markets, Smyth said.
“We’re expecting a busy year,” said Smyth, one of three founding principals at CIP, along with Chuck McKenna and Robert Strom.
CIP was formed in 1995, and since then has bought and sold more than $1 billion of properties. Regional buildings it owns or manages include the 500,000-square-foot Empire Towers in Ontario, as well as part of Irvine’s Centerpointe office complex at the intersection of Jamboree Road and MacArthur Boulevard.
The company’s near-term strategy centers on buying under-performing multi-tenant business parks that are poised to see improving fortunes once the economy turns around, Smyth said.
That’s a switch for CIP, which has made headlines in the past few months with its sales, particularly in Las Vegas, where it has substantial holdings.
CIP recently announced the sale of a 425,000-square-foot group of industrial and flex buildings in Las Vegas’ Hughes Airport Center. The six-building portfolio—which had been owned by a venture between CIP and Newport Beach-based real estate investment and financing company Buchanan Street Partners—sold for $36.3 million, or $85 per square foot.
The buyer was Boston-based TA Associates, a privately held real estate investor that has a Newport Beach office and counts several prominent Orange County buildings in its portfolio.
Buildings that traded hands in the Las Vegas sale included properties used by Cirque du Soleil, among other tenants. CIP will continue to act as a property manager for the buildings for TA Associates, the company said.
Hughes Airport Center’s industrial and office buildings total about 3.3 million square feet.
CIP and Buchanan Street had been the largest landlord in the business park, after a string of deals beginning in 2005 pushed their holdings at the park close to 2 million square feet.
The two companies still own about 1.2 million square feet of buildings in the business park, which they value at about $120 million.
Vegas Recovery
The deal with TA Associates came a few weeks after CIP and Buchanan Street sold a nearby Las Vegas industrial building for $7.5 million, to Newport Beach-based Pacifica Real Estate Group.
The Las Vegas deals are a sign that the city’s depressed commercial real estate market is beginning to rebound, according to Smyth.
There’s been “continued interest by institutional investors for core industrial assets in Las Vegas,” he said at the time of the sale.
“Warehouse and distribution rents have bottomed and demand has started to improve so investors are taking notice and investigating the Las Vegas market for acquisitions,” said Darla Longo, vice chairman of brokerage CBRE Group Inc., who worked on the sale.
Recent Deal
CIP’s biggest acquisition in the past few months was a $6.5 million buy of a bank-owned business park in Riverside that closed in November. The company plans to spend another $3.8 million to upgrade the 138,000-square-foot office project, called the Summit Business Center.
The Riverside property was purchased by CIP through a venture with Chicago real estate investment firm Blue Vista Capital Partners. The companies have made two other deals together, including a $14 million buy of a Southern California industrial portfolio that was announced in May.
Meantime, there’s at least one local deal that’s now unlikely to take place.
CIP’s headquarters are located at Centerpointe, a high-profile business park next to the Impac Center and Newport Gateway office buildings. CIP owns one portion of the multi-building complex, and Newport Beach-based Professional Real Estate Service Inc., which operates under the PRES name, owns the remainder.
Both owners put their respective portions of Centerpointe on the market for sale last year, but neither completed a deal. Smyth said CIP opted to refinance its buildings, rather than sell them; PRES has also pulled its buildings off the market.
