Rexford Industrial Realty Inc. (NYSE: REXR) has struck Orange County again with another acquisition, the largest industrial deal in the region since the beginning of the year.
The Los Angeles-based REIT, one of the most active buyers of industrial real estate in OC over the past few years, last month paid $94.3 million for a 278,572-square-foot distribution facility in Fullerton.
It marks the largest single-property industrial purchase in OC this year.
The deal works out to about $338 per square foot; that’s about 10% off the average asking per-square-foot price in OC for the first quarter this year, according to data from CBRE Group Inc.
The investment brings a 5.6% initial cash yield for Rexford and will see nearly 4.3% growth through annual embedded rent increases, according to the company.
It’s unknown how much the seller, an LLC with ties to Los Angeles-based investment manager American Realty Advisors, paid for the building.
The Fullerton building, located just a couple miles from the Orange (57) and Riverside (91) Freeway junction at 1901 E. Rosslynn Ave., marks Rexford’s 16th OC buy since the start of 2023. The company, which specializes in infill properties across Southern California, has acquired most of those local assets through a $1 billion portfolio deal totaling 3 million square feet with Blackstone Inc. (NYSE: BX).
“Not only is OC all infill, but we focus on the area due to its huge supply and demand imbalance,” Rexford Chief Investment Officer Patrick Schlehuber told the Business Journal.
“There’s tremendous demand across many different sectors and supply is very constrained.”
Rexford’s OC assets total about 5.1 million square feet; about 10% of the nearly $9.8 billion-valued REIT’s total portfolio is in Orange County.
Plans for Building
Rexford does not have any plans to reposition the Fullerton building, as it’s been home to a long-term tenant: an arm of Australian packaging manufacturing, distribution and marketing firm Orora Ltd. (ASX: ORA), according to real estate market data tracker CoStar Group Inc.
The tenant may have leased the facility since the building’s delivery in 1989.
Rexford’s buy-and-hold approach to the property mirrors the company’s strategy with several of its recently acquired OC industrial assets.
“Our quarter-to-date investment and disposition activity continue to evidence Rexford Industrial’s disciplined approach to highly accretive capital allocation, positioning the company for near- and long-term value creation for our stakeholders,” Rexford’s Co-Chief Executives Michael Frankel and Howard Schwimmer said in a statement.
$1B Blackstone Deal
Rexford’s Fullerton acquisition comes about a month after its $1 billion deal with Blackstone.
The company bought 48 properties from the investment management giant, 11 of which are in OC and run a combined 815,000 square feet.
Property records indicate those 11 properties sold for close to $262.5 million on a combined basis, or roughly $322 per square foot.
The deal is the largest reported bulk purchase of industrial properties in OC in over a year, not factoring in land deals for new development, according to property records.
The assets include a mix of older buildings, as well as some newly built facilities.
Among the newer additions is 1500 E. Walnut Ave., a manufacturing facility in Fullerton that opened in 2022.
The building, running about 122,000 square feet, sold for $50 million, or about $411 per square foot.
That Fullerton facility is leased to Brea-based EV maker Mullen Automotive Inc. (Nasdaq: MULN).
Mullen uses the property, located roughly 3 miles from the Riverside (91) and Orange (57) Freeway junction, as its new battery development and production plant.
Redevelopment Plans
One OC asset Rexford isn’t preserving is a 12.1-acre site in Anaheim it bought from L3Harris Technologies Inc. (NYSE: LHX) for $57 million.
Rexford aims to redevelop the site, following a two-year leaseback to L3Harris, real estate sources indicate.
Plans for the project call for a 264,000-square-foot Class A building to be built on the property, located at 600, 602 and 708 E. Vermont Ave. The buildings are about a mile northeast of Disneyland Resort, on the opposite side of the Santa Ana (5) Freeway as the theme park.
The Anaheim revamp will join a host of other local redevelopment projects Rexford has in the works, including four office-to-industrial conversions.
Those four sites, along with the L3Harris property, were bought for a cumulative $318 million, in deals starting in 2021.
Prominent sites Rexford bought include the Fox Racing headquarters at 16752 Armstrong Ave. in Irvine, which it acquired a year ago for $40 million. The motocross and mountain bike gear and apparel retailer’s lease expires at the end of 2027, property records indicate, with two five-year extension options.
Plans for the site’s 81,600-square-foot office and warehouse space remain flexible.
Another long-term redevelopment play for Rexford is a nearly 370,000-square-foot office complex at 1801 E. St. Andrew Place in Santa Ana. Rexford in 2021 paid $105.3 million for the property, dubbed Pacific Corporate Center, which runs 21.3 acres just west of the Costa Mesa (55) Freeway.
The center, built in 1987, is currently home to one of Santa Ana’s largest employers: Behr Paint, a manufacturer and supplier of architectural paint and exterior wood care products. Behr’s lease runs through November 2032, according to CoStar records.
