Commercial Real Estate Investment Firm Plans More Acquisitions in the Region This Year and Beyond
SAN BERNARDINO, Calif. — January 18, 2019 — Tower 16 Capital Partners, in a joint venture with Henley USA, has acquired Hillside Village Apartments, an 80-unit multifamily project in San Bernardino, for $11 million from a private seller. This is the first of many acquisitions the company plans to make in the Inland Empire over the next 12 to 24 months.
“While this acquisition is small for us, it fits with our criteria of purchasing assets with significant operational upside and require capital improvements,” said Tower 16 Principal Mike Farley. “Our plan is to replicate our growth in the Las Vegas market, where we now have 1,600 units, as we assemble a portfolio of multifamily properties with considerable upside.”
Hillside Village is located at 2196 Kendall Drive in San Bernardino, within one mile of California State University, San Bernardino, a strong submarket with median incomes of $57,000. The apartment complex is near parks, freeways, Loma Linda University and Victoria Gardens open-air shopping destination.
Hillside Village features one- and two-bedroom apartments with covered parking and private balconies or patios, a pool, spa, fitness center and laundry facilities.
“We are excited about the Hillside Village acquisition as part of a larger acquisition strategy in the Inland Empire,” says Tower 16 Principal Tyler Pruett. “There is a huge need for affordable housing options as the Inland Empire continues to attract new people to the region from more expensive coastal markets.”
Demand for apartments in the Inland Empire soared to a level not seen in 16 years at the end of 2018, according to the Riverside Press-Enterprise, with vacancy rates of 3.4 percent. The average monthly rent in the region is $1,504 per month, a 5.5 percent increase over the year before, and rents exceeded $1,700 in several western San Bernardino County cities.
Real estate brokers Warren Berzack and Slavic Zlatkin of Lee & Associates represented both the buyer and seller in the transaction.
About Tower 16 Capital Partners LLC
Tower 16 Capital Partners, LLC is a commercial real estate investment and management company focused on acquiring and managing value-add investments in the Western United States. Headquartered in Carlsbad, Calif., Tower 16 was founded by principals Mike Farley and Tyler Pruett who have over 35 years of combined institutional real estate experience with an emphasis on value-add investing. The principals have managed, repositioned and developed over 300 properties with a combined market value in excess of $2 billion for large public companies and premier private equity firms.
CapRock Partners Breaks Ground on 2 Million SF Industrial Masterplan in Inland Empire West
Leading developer bringing new LEED certified industrial complex designed to support economic growth and positioning to key Southern California logistics location
CapRock Partners is underway on the construction of Phase I of Palomino Ranch, a large-scale, state-of-the-art master-planned industrial warehouse development in Norco, Calif. totaling approximately 2 million square feet across 24 buildings on approximately 112 acres. The initial phase of the Class A project includes eight stand-alone industrial buildings totaling approximately 700,000 square feet on 44 acres.
At total project completion, Palomino Ranch will be the largest industrial real estate development in Norco’s history. The project will be LEED certified and will feature design elements such as wrap-around wooden porches and lantern streetlighting that are reflective of Norco’s equestrian background and nickname, “Horsetown U.S.A.”
“CapRock Partners creates world-class logistics facilities, and our team has made a commitment that all new ground-up development projects we build in California will meet or exceed LEED certification standards going forward, and we are excited to initiate this commitment with the commencement of Palomino Ranch,” said Patrick Daniels, co-founder and chief executive officer at CapRock Partners. “The landmark development is designed to not only satisfy the needs of a wide range of tenants and industries requiring accessible high-quality warehouse space, but it will also reflect Norco’s rich local history and character through its equestrian-themed aesthetic.”
Phase 1 buildings will range from approximately 55,000 square feet to 156,000 square feet, with clear heights from 30 feet to 36 feet. Buildings greater than 20,000 square feet will offer up to 6,000 square feet of mezzanine office space. Other features include secured and unsecured concrete truck courts, 125-foot truck court depth, ESFR sprinklers and up to 4,000 amps of power.
“The Inland Empire industrial real estate market is near full-occupancy as retailers and suppliers continue to shift their strategies in today’s post-pandemic economy,” added Daniels. “Norco is well-positioned geographically for logistics and transportation in the Inland Empire West submarket, within minutes to Orange County, and Palomino’s Phase I will be coming online at an ideal time to provide needed warehouse space.”
Located at 1811 Mountain Avenue, Palomino Ranch is west of I-15, accessible via the Second Street exit. The property is approximately two miles north of the 91 Freeway/I-15 interchange and is easily accessible to additional regional transportation routes such as the 71 Freeway, 60 Freeway and I-10, providing quick access to nearly any location in the Los Angeles Basin.
The project is approximately one hour driving distance to Los Angeles International Airport and the ports of Long Beach and Los Angeles. The location is also within one-day truck service to key logistics nodes in Northern California’s Bay Area, Salt Lake City, Las Vegas and Phoenix. Truckers can reach further Western U.S. linkages such as Portland, Ore., Boise, Idaho, Denver and Austin, Texas within three days. Palomino Ranch’s corporate neighbors include FedEx, UP and Amazon, among others.
“Palomino Ranch is setting a new high standard for Southern California industrial real estate development, and our team is grateful for the City of Norco’s partnership in developing a facility that will elevate the city’s economic position and overall efficiency while supporting employment growth in the area,” said Jon Pharris, co-founder and president at CapRock Partners. “CapRock is investing Norco, a critical point in the supply chain, and as more national and multinational corporations establish their businesses here, CapRock is pleased to offer a modern LEED certified warehouse complex that allows them to enhance their operations.”
Jeff Ruscigno, Brian Pharris, Paul Earnhart, Ryan Earnhart, Austin Hill and Jeff Smith of Lee & Associates Commercial Real Estate Services have been retained to market the lease availabilities at the Palomino Ranch. Phase II-A, consisting of nearly 750,000 square feet is planned to begin in 2023 and Phase II-B will be approximately 533,000 square feet.
Palomino Ranch is CapRock ‘s third ground-up development project in Norco and is one of two projects the firm is currently developing within the city. CapRock is in under construction on Saddle Ranch South, a three-building, 374,000-square-foot industrial complex across 23.8 acres, located less than three blocks north of Palomino Ranch at 3000 – 3100 Horseless Carriage Drive.
In 2021, CapRock completed and sold Saddle Ranch Business Park, a 422,000-square-foot four-building Class A industrial warehouse complex in Norco. The asset was 100% leased to vitamin and nutrition company, Goli Nutrition, before the sale.
CapRock’s portfolio and proven track record include nearly 30 million square feet of industrial real estate assets in Central and Southern California, Las Vegas, Phoenix and Texas. The firm will be under construction on approximately 10 million square feet of industrial space in the next twelve months, inclusive of Palomino Ranch and Saddle Ranch South, and continues to actively pursue new investment opportunities for ground-up development and value-add repositioning in key logistics locations throughout the Southwest U.S. and Texas.
SRS’ National Net Lease Group Brokers $13.95 Million Sale of Ramona Plaza, a 102,546-SF Retail Center in Hemet, CA
COMMERCIAL REAL ESTATE TRANSACTION ALERT
SRS Real Estate Partners’ National Net Lease Group (NNLG) announced today it has completed the $13.95 million sale of Ramona Plaza, a 102,546-square-foot (sf) retail center located at 1300-1480 E. Florida Avenue in Hemet, CA (a city in Riverside County).
SRS NNLG’s Winston Guest, Matthew Mousavi and Patrick Luther represented the seller, a Southern California-based investor. The buyer, a California-based private investor was represented by The Visintainer Group.
Built in 1974 and situated on 6.41 acres, Ramona Plaza was 88% occupied at the close of escrow with anchor tenants including Grocery Outlet, Planet Fitness, and Dollar Tree which all recently extended their leases. National brands such as Aaron’s, Leslie’s Poolmart, Subway, and Little Caesars Pizza, among others, are also tenants.
The property was attractive to the buyer as it was priced well below replacement cost at $137 per square foot, and featured upside potential through lease-up of the vacancies and bringing some tenants up to market rents.
“We generated over a dozen offers on this asset which is testimony that multi-tenant retail investment property in Southern California continues to garner strong interest. Investors were attracted to the well-positioned corner location of this grocery-anchored shopping center with a quality tenant line-up that offered essential service and e-commerce resistant business,” said Guest.
“Inland empire markets like Hemet are receiving renewed interest, most notably driven in part by substantial growth in the industrial and manufacturing markets in these areas, drawing investment toward the retail sector as well. Being a value-add grocery anchored center in SoCal, Ramona Plaza offered a rare investment opportunity,” added Mousavi.
Ramona Plaza is located at the highly trafficked, main and main intersection of E. Florida Avenue and N. San Jacinto Street which sees more than 57,000 vehicles passing by daily. The property benefits from significant frontage along E. Florida Avenue, the primary retail corridor for Hemet with excellent visibility and access. Over 170,000 residents and more than 29,000 employees live and work within a five-mile radius of the property.
In 2021, SRS’ Investment Properties Group and National Net Lease Group (NNLG) completed more than $3.1 billion in deal volume comprised of 899 transactions in 49 states, and currently has more than $2 billion in property on the market, with nearly 200 properties sold year-to-date in 2022.
Hanley Investment Group Completes 4th Retail Property Sale at Monterey Crossing in Palm Desert, Calif.
COMMERCIAL REAL ESTATE TRANSACTION ALERT
New construction Habit Burger Grill Drive-Thru sells for $4.57 million, representing a record-low cap rate nationwide for a single-tenant Habit Burger Grill
Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm arranged the sale of a 2021-new construction, single-tenant The Habit Burger Grill Drive-Thru at the newly developed Monterey Crossing shopping center at the Interstate 10 and Monterey Avenue interchange in Palm Desert, California. The sale price was $4.57 million. This transaction marks the fourth retail pad building Hanley Investment Group has sold at Monterey Crossing, totaling a combined 17,060 square feet and approximately $20.3 million.
Hanley Investment Group’s Executive Vice Presidents Bill Asher and Jeff Lefko represented the developer and seller, Fountainhead Development of Newport Beach, California, in all four retail transactions. John Costa, David Fults and Brian McLoughlin of Voit Retail Estate Services in Los Angeles represented the buyer of The Habit Burger Grill Drive-Thru, a private investor based in Southern California. Previous sales included two brand new, single-tenant ground leased pads to Chick-fil-A Drive-Thru and Quick Quack Car Wash, along with a two-tenant pad building occupied by AT&T and Spectrum. All four properties were sold to four separate buyers at record-low cap rates.
The single-tenant net-leased investment occupied by a new, 2,700-square-foot Habit Burger Grill is situated on 0.91 acres at 73320 Dinah Shore Drive in Palm Desert. According to Asher, “We created a competitive bidding process that helped secure a 1031 exchange buyer at 100% of the asking price,” said Asher. “The sale represented a record-low cap rate for a single-tenant Habit Burger Grill nationwide.”
The Habit Burger Grill is known for its signature Charburgers and fast-casual dining experience, notes Asher. The menu also includes sandwiches, fresh salads, a variety of sides and more.
In March of 2020, Yum! Brands, which owns Taco Bell, KFC and Pizza Hut, finalized the purchase of the Southern California-based burger chain for around $375 million. Today, Habit Burger currently has 340 locations globally with the majority of its locations in California.
“The new Habit Burger Grill’s Palm Desert location incorporates indoor dining, patio dining and drive-thru to maximize sales,” said Asher. “The pandemic certainly shined a very bright light on the impact of having a drive-thru. Approximately 70% of quick-serve restaurant sales were generated through a drive-thru and sales were approximately 50% greater in locations that had a drive-thru. We expect to see more QSRs with drive-thrus as companies roll out their prototypes across the U.S.”
Monterey Crossing is strategically located at the signalized intersection of Monterey Avenue and Interstate 10 freeway, one of the most centrally located and heavily visited interchanges (110,000 cars per day) in the Desert Cities area of Southern California and a primary east/west arterial connecting to Los Angeles to San Bernardino County, Riverside County and Phoenix, Arizona. Monterey Avenue (37,000 cars per day) is the major north/south connector between the freeway, resorts and high-income communities of Palm Desert, Rancho Mirage and Cathedral City.
Fountainhead is currently developing additional single-tenant pads and multi-tenant buildings in the first phase of the project in addition to a second phase of the shopping center, which combined will ultimately feature 17 acres of best-in-class retail.
Monterey Crossing also benefits from freeway-visible pylon signage and is the first Palm Desert center to be approved for freeway signage, according to Asher.
National tenants located at the intersection of Monterey Avenue and Interstate 10 include Costco, Home Depot, Kohl’s, Sam’s Club, Walmart, 99 Cents Only, Ashley HomeStore, JOANN Fabrics and Crafts, PetSmart and Regal Cinemas.
Palm Desert is the geographic center of the Coachella Valley, a fast-growing region of Southern California. Within a three-mile radius of Monterey Crossing, the population increased by 53% between 2000 and 2020 and is projected to grow an additional 7.4% by 2025. The average household income is currently $106,000. There are more than 4,500 new residential units planned or under construction within a 2.5-mile radius of Monterey Crossing.
“In 2022, we anticipate developers and shopping center owners will continue to see the accretive value of implementing a break-up sale strategy to capitalize on the high demand for single-tenant and multi-tenant retail pad product at premium pricing,” said Asher.
Hanley Investment Group has sold more than $407 million in retail properties in the Inland Empire in the last 36 months.
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