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Los Angeles-based REIT buys seven buildings in county

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Pacific Office Properties Trust Inc. (AMEX: PCE), the newly formed Los Angeles-based real estate investment trust, acquired 11 office buildings during the second quarter, including seven in San Diego County.

Pacific Office Properties is a REIT that acquires, owns and operates office properties in the Western United States, focusing initially on the four high-growth markets of Honolulu, San Diego, Los Angeles and Phoenix

"The acquisition of the San Diego Portfolio expands Pacific Office's presence in the San Diego market where our management team is already well-recognized and has a significant track record of successful operations," said Dallas Lucas, Pacific Office's president and chief executive officer in a prepared statement.

The second quarter marks the company's first complete fiscal quarter since it went public on March 19.

The new company became a west coast office REIT when it acquired The Shidler Group's western U.S. office building operations at the time of the public offering.

The REIT has continued to acquire its substantially leased buildings since then.

Two San Diego properties were placed into the new REIT at its formation.

These are the 140,000-square-foot Seville Plaza at 5469, 5471 and 5473 Kearny Villa Road in Kearny Mesa, and the 64,000-square-foot Sorrento Tech Center at 10180 Barnes Canyon Road in the Sorrento Valley area.

In June, the west coast REIT announced it had acquired four San Diego-area office buildings totaling 129,000 square feet in the Scripps Ranch Business Park in San Diego, and the Palomar Heights Corporate Center and an adjacent office building in Carlsbad.

The June transaction completed Pacific Office's acquisition of Shidler's San Diego portfolio, three of which were acquired in May.

The other three assets in the county were Class A/B-plus office buildings containing a total of 54,000 leasable square feet and are located in the Carlsbad and Torrey Hills submarkets.

"While each of these buildings represents ideal value-added opportunities, they all possess solid

fundamentals of high-quality development and locations in prime submarkets," Lucas said.

Pacific Office will own the San Diego portfolio in partnership with a subsidiary of Arizona Land Income Corp., an institutional co-investor.

"We have executed well on our strategic priorities following the formation transactions," Lucas said. "We have steadily built our portfolio with attractive assets and developed partnerships with institutional co-investors that are integral to our business model. We have ample access to capital to continue building our portfolio, executing our plans to improve the performance of the properties we have acquired, and creating value for our shareholders and partners."

As part of its formation transactions, Pacific Office was granted the option to acquire certain properties that The Shidler Group may have acquired, or had under contract to acquire, prior to the consummation of its formation.

The terms of the transactions were not immediately available and calls to the REIT were not returned.

Pacific Office Properties posted a net loss of $1.96 million on $18.25 million in revenue for the three months ended June 30, but such a loss isn't uncommon for a startup REIT.

Pacific officials are also quick to note that there are certain entities now under the Pacific Office umbrella whose performances are still being calculated.

The company, which now has no less than 3.3 million square feet of leasable space, is externally managed by Pacific Office Management, Inc., an affiliate of The Shidler Group.

The Shidler Group is a private long-term investor in commercial real estate. Over the past 30 years, through its private and public affiliates, it has acquired, owned and managed more than 2,000 properties containing more than 150 million square feet of leasable area -- including millions of square feet of office space in San Diego County.

In addition to the formation of Pacific Office Properties Trust, Inc., The Shidler Group has helped found three other publicly traded real estate investment trusts -- Corporate Office Properties Trust (NYSE:OFC), First Industrial Realty Trust (NYSE:FR) and TriNet Corporate Realty Trust(formerly, NYSE:TRI, now part of iStar Financial (NYSE:SFI)).

Shidler's First Industrial Realty Trust recently paid $6.45 million for a two-story, 45,449-square-foot building at 9880 Mesa Rim Road in the Sorrento Mesa area.

The REIT's stock has been in the $6.14 to $6.16 per share range during the past couple of days.

While based in Honolulu, Shidler has been investing in San Diego for at least the past 21 years.

In late 2006 or early 2007, Shidler paid $187 million to acquire a 15-building Southern California office portfolio comprising 1 million square feet.

The assets included the Carlsbad Corporate Center at 1950 Camino Roble in Carlsbad, an industrial building at 13550 Stowe Drive in Poway, and the two-building Via Frontera complex in Rancho Bernardo.

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