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Thursday, Feb 29, 2024

IRA Capital Preps for Busy 2024

IRA Capital LLC is preparing for an increasingly active year, following a slower 2023 for the Irvine-based commercial real estate investor.

The firm is hoping to deploy “a lot” of capital into the market as record high interest rates begin to let up, Managing Partner Jay Gangwal told the Business Journal.

Moreover, the firm’s eagerness to acquire more real estate is driven by its belief that “sellers, both locally and nationally, have become a bit more realistic on pricing expectation, given how the market has moved in the past 24 months,” Gangwal said.

The company already has two deals—a property in Newport Beach and a medical building in Northern California—that are set to close in the next 30 days, officials said.

IRA Capital has been among the most active local buyers of commercial real estate the past few years, spending well over $300 million in OC since 2021, brokerage data indicates.

2023 Slowdown

Reinvigorated by sellers’ shifting attitudes, IRA Capital projects this year will be more fruitful than 2023.

Last year, the firm saw eight transactions in total, according to real estate industry data.
That’s down from the 12 deals it saw in 2022 and below the firm’s average of 10 transactions per year since its founding in 2010.

Of the eight deals IRA Capital closed last year, half of those were acquisitions.

IRA Capital to date has acquired over 8 million square feet of real estate across 26 states, an investment footprint worth more than $3 billion, according to its site.

Senior Home Buy

Though it has made buys in the office, student housing, industrial and hospitality sectors, IRA Capital is still set on healthcare assets as its main acquisition focus.

“Healthcare will continue to be an anchor of the company,” Gangwal said.

In 2021, it sold off a portfolio of medical office and life science properties to Nuveen for $620 million. Last year, it launched a $500 million fund for buying medical and senior housing properties.

Competition in the sector is growing as healthcare properties “have now been shown to be a more resilient asset class that’s resonating more so with investors now than in prior cycles,” Gangwal said.

IRA Capital last month got a piece of the sector’s pie in the local market, with its acquisition of San Clemente Villas by the Sea, a 140-unit assisted living and memory care community along Camino De Los Mares near the San Diego (5) Freeway.

The firm paid $40.8 million—or about $291,000 per unit—for the 109,293-square-foot senior living center, which was built in 2002 and has had no significant upgrades since its completion.

IRA Capital aims to revamp the aging facility’s interior and exterior.

“We’re optimistic that the renovation will really transform the asset,” Gangwal said. “San Clemente has been an underserved market for high-quality senior housing.”

The renovations will take place within the next 12 to 24 months.

MBK Senior Living, an Irvine-based senior care provider, will be operating the facility and will also work with IRA Capital on the property’s upgrades.

Hotel Solarena

Another local transaction that closed out 2023 for IRA Capital is the $19 million sale of Sonder Solarena, a 47-room hotel along Coast Highway in Newport Beach.

The deal works out to about $404,000 per room for buyer Alex Pak, an Irvine resident, property records indicate.

IRA Capital three years ago bought the hotel from San Clemente resident Pravin Chatrisa for $16 million, according to data from real estate tracker CoStar Group Inc. The hotel, built in 1970, was renovated in 2020.

Industrial Conversion?

IRA Capital’s largest local property, another non-healthcare asset for the company, may see some changes in the next two years.

VKCC, a 450,000-square-foot creative office campus in Irvine, is set to begin redevelopment in the second half of this year to 2025.

Though the firm is learning toward an industrial use for the site, “everything’s on the table,” Gangwal said.

IRA Capital acquired VKCC, which spans 24 acres near the intersection of Von Karman Avenue and Alton Parkway, for $102.4 million last January. The nine-building office park counted an occupancy rate of 60% at the time of sale.

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