Albertsons Cos. Inc. has put two huge Los Angeles County distribution centers up for sale.
Together, they make up “the largest industrial redevelopment and reuse opportunity in Southern California,” according to marketing materials from Jones Lang LaSalle Inc., and could fetch more than $250 million.
The two sites, a 78-acre plot that houses a 1 million-square-foot distribution center in Santa Fe Springs and a 92-acre site with a 1 million-square-foot distribution center in El Monte, have been listed for sale as part of a portfolio that also includes a 54-acre site in Clackamas, Ore.
The centers are used by Safeway Inc. and Vons, which operate under the Albertsons umbrella. Albertsons, based in Boise, Idaho, is owned by an investor group led by New York’s Cerberus Capital Management, which bought the company in 2013 and merged it with the Safeway chain in January.
According to the marketing materials, Safeway and Vons would lease back the properties in a short-term deal while the buyer completes entitlements for redevelopment.
An asking price for the three sites was not disclosed. Louis J. Tomaselli and Zachary P. Niles of JLL’s Irvine office, who are representing Albertsons in the sale of the L.A. properties, declined to comment. Albertsons did not return requests for comment.
John Hollingsworth, executive managing director and industrial leader at Colliers International’s El Segundo office, said industrial land in the El Monte area sells for an average of $30 a square foot, which would value the property at 4300 Shirley Ave. at around $120 million. Industrial land in Santa Fe Springs sells for an average of $40 a square foot, which would value the 12801 Excelsior Drive property at roughly $136 million.
With industrial vacancy rates below 3 percent in the county, demand is high for Class A distribution space, Hollingsworth said. The demand is driven, in part, by the growth of e-commerce. Online retailers seek modern industrial space. The properties Albertsons is selling are Class C, according to CoStar Group Inc., so it is likely that the buyer will keep the use industrial, but will redevelop them into modern Class A distribution facilities, Hollingsworth said.
Office Portfolio Buy
Colony Capital Inc. is not pinching pennies.
The Santa Monica real estate investment trust spent north of $200 million earlier this month on an 11-property office and industrial portfolio that includes three assets in the county, as well as buildings in San Diego, Riverside and Sacramento, according to sources with knowledge of the deal.
Colony, which went public in April by merging with its existing REIT, Colony Financial, spent more than $130 a square foot on the properties, which total about 1.5 million square feet. The seller was Bank of America, which recently took over the properties that formerly belonged to Garden Grove real estate firm Abbey Co.
Representatives of Colony Capital and Bank of America declined to comment on the deal. Kevin Shannon and Scott Schumacher of CBRE Group Inc., who represented Bank of America in the transaction, also declined to comment.
Colony Capital represented itself in the deal, sources said. It plans to add value to the large office and industrial buildings, which are an average of 60 percent leased, making improvements to increase occupancy. Then it will reposition the buildings and sell them.
The county properties in the portfolio are Catalina Landing, a four-building, 278,797-square-foot Class A office campus at 310-40 Golden Shore in Long Beach; Commerce Plaza, an office park consisting of multiple buildings in Commerce; and retail center Glendora Plaza.
Malibu Condos?
San Francisco firm Pacific Eagle purchased Villa Malibu, a 68-unit, 136,000-square-foot Class A luxury apartment community on a 10-acre site at 6487 Cavalleri Road in Malibu earlier this month from Washington, D.C., private equity firm Carlyle Group for $62 million, or roughly $912,000 a unit.
Villa Malibu is fully occupied as a rental property with one-year leases, but it is entitled for residential condominiums. The possibility of a conversion was of interest to the buyer, who did not divulge exact plans, and might hold on to the property for some time before making a decision, said Matt Case of Madison Partners, who represented the seller along with Bob Safai, Darin Beebower and Brad Schlaak. The buyer was represented internally.
“The cost of housing in Los Angeles, and particularly in Malibu, is so high that a luxury condo in Malibu with ocean views could sell in the $1.5 million range, so there is a definitely a lot of value for the condo route,” Case said.
Two-bedroom lofts at the property, which average about 1,800 square feet, rent for an average of almost $5,000 a month, according to CoStar. Two-bedroom lofts, which average 2,100 square feet, rent for almost $6,000 a month. All units have outdoor balconies or patios.
Orange County Business Journal reporter Mark Mueller contributed to this report. Staff reporter Hannah Miet can be reached at [email protected] or (323) 549-5225, ext. 228.
