Industrial Lease-Up

pr_holland1Penwood Select Industrial Partners II, L.P.

CASE STUDY

Industrial Lease-Up

Location: Irvine, CA

Strategy:

The previous owner, an auto manufacturer, considered the property a non-productive asset, essentially a drain on the corporate balance sheet. Penwood and its operating partner identified the asset as an attractive investment candidate due to its location within the Irvine Spectrum submarket of Orange County, in what Penwood believes is one of the premiere industrial submarkets of the country.

The property was sourced in an off-market negotiation and acquired at a discount to replacement cost. The investment plan was to perform modest upgrades to the building, as may be needed, to attract a tenant. Due to the low basis in the building, leasing the asset below market rents would still provide the opportunity for a value-creation margin to the fund. The exit strategy was to lease the asset and, as the market recovers, sell the asset to an investor. Alternatively, due to the high level of user activity in the market, the partnership would entertain a sale to a user.

pr_holland2

Property Description:

  • 185,020 square feet of industrial space in a single building, built in two phases in 1981 and 1986.
  • 8 acres with 680 feet of frontage on Holland Street.
  • One mile northeast of the four-way interchange between I-5 and the Bake Parkway.
  • Fenced yard within the truck loading area of the site.

Results:

All of the upgrades were completed and the asset was partially leased on a long-term basis to a credit tenant. Prior to completing the leasing strategy, the asset was sold to an investor.

*Please note that past performance is not a guarantee of future results.

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