Rexford Pays $200M for 2 San Diego Assets

9323 Balboa Ave. Image courtesy of CommercialEdge

Rexford Industrial Realty Inc. has acquired 9223-9323 Balboa Ave. and 4285 Ponderosa Ave., two neighboring properties in San Diego, for $200 million. The previous owner was Cubic Corp., according to CommercialEdge data.

Rexford is considering redeveloping both properties, now including a 100,000-square-foot office building and a 55,000-square-foot industrial facility, into a distribution hub. The assets traded in sale-leasebacks that allow the new owner access to an initial 5.3 percent unlevered cash yield, which is projected to grow to an aggregate unlevered stabilized cash yield of 7.4 percent upon redevelopment.

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The San Diego purchases are the REIT’s most recent in a series of Southern California acquisitions that totaled $357.2 million. The deals were partly funded with proceeds from forward equity settlements, a recent public bond offering and cash on hand. Rexford’s year-to-date investments amount to $762 million.

Rexford’s recent deals

Just days before purchasing the San Diego assets, The REIT paid $143 million for an 18.4-acre industrial zoned site at 9000 Airport Blvd. in Los Angeles. The property sits adjacent to Los Angeles International Airport and is leased to a single credit tenant through a three-year sale-leaseback deal that includes annual 4 percent rent increases. the new owner retains the option to redevelop the property into a Class A industrial campus or otherwise repurpose the site as an industrial outdoor storage area. The investment pays out an initial 5.4 percent unlevered cash yield, which is projected to grow to an unlevered stabilized cash yield upon total investment of 6.3 percent.

In a previous transaction, Rexford acquired 3520 Challenger St. in Torrance, Calif., for $14.2 million. The property is an industrial-zoned, covered land site measuring 2.5 acres and home to a light industrial research and development building occupied by a single tenant under a long-term lease. The Torrance property nets an initial unlevered cash yield of 6.3 percent, growing annually through contractual 3 percent rent increases.

Meanwhile, Rexford also netted $17 million from the sale of 8101-8117 Orion Ave. in Van Nuys, Calif. A multi-tenant building, the property totals 48,394 square feet and was 93 percent occupied at closing. The unlevered internal rate of return on the transaction is 16.8 percent.