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The latest investment & commercial real estate news specially curated by Partners Capital
September 20, 2017
Retail Investors Board The Industrial Train
The following was originally posted on globest.com
Sept 19, 2017 | By Kelsi Maree Borland
Shopping center investors are shifting from brick-and-mortar investments to third-party logistics facilities.
It was bound to happen. Investors from all other asset classes are starting to look at opportunities in industrial, and now retail investors are climbing aboard the train. Partners Capital, which typically focuses on shopping centers and regional malls, acquired a 92,000-square-foot industrial center in San Bernardino as a retail/ecommerce play, and it is a growing trend. We sat down with Mark Blumenthal, VP of acquisitions at Partners Capital, for an exclusive interview to talk about their shift into industrial and the emerging trend in the market.
GlobeSt.com: Have you seen a major increase in retail investors trading into industrial assets? When did this trend start?
Blumenthal: Yes, we have seen many of our peers/competitors whom were previously investing primarily neighborhood & regional shopping centers shifting focus away from big-box heavy retail sites to third-party logistics industrial buildings here in the West Coast. This shift seems more readily apparent over the past 14-18 months, while we’ve adjusted our focus to industrial over the past 18 – 30 months.
GlobeSt.com: Is ecommerce alone driving retail investors into industrial, or the general strength of the market?
Blumenthal: Believe it’s a combination of the two. On one hand you B2B, the biggest form of ecommerce, coupled with B2C and the growing C2C space, and other various forms of ecommerce combining for a 23% YoY growth in the sector, 51% of Americans prefer to shop online, 67% of Millennials and 56% of Gen xers prefer to shop online rather than in-store, and a handful of other statistics that show ecommerce is on pace to do roughly $436B for 2017 and projected to grow to $630B in 2020. This is putting a severe supply constrain on industrial product here in Southern CA, which has the two largest ports in the country, which equate to 43% of all goods that enter the country. Of that 43%, 60% is retained and consumed in Southern CA alone. Needless to say, it’s a very strong market with a shrinking supply and increasing demand.
GlobeSt.com: What is competition like for these investors to move into this asset class?
Blumenthal: Highly competitive with continually shrinking yields. I started my career as an intern in 2006, and I remember key money being thrown around to obtain deals. I wouldn’t say we’re at that point yet, but it’s getting very tough to make investments pencil without making some serious assumptions. For us, basis is the key focus. We rely heavily on our broker network & internal legwork to source fundamentally basis sound investments, where we can best limit of exposure and protect principal investment.
GlobeSt.com: With demand so high in industrial, are there many opportunities to break into industrial?
Blumenthal: There is opportunity in every market, but with the highly competitive nature of industrial here in So. Cal. Its increasingly difficult to break into or increase portfolio GLA. We’ve begun to expand out into the Inland Empire in addition to our focus on the South Bay, where larger industrial product exists, to source additional opportunities.
GlobeSt.com: Are you seeing investors from other asset classes trade into industrial as well?
Blumenthal: As I mentioned previously, whatever your core focus was previously, in this market & the foreseeable future, with the way consumers are accessing their goods and services, industrial will continue to play a key role, and thus should be in your investment focus and portfolio. New investors are trying to find their legs in industrial, and the veterans are tripling down.
GlobeSt.com: Is this a smart move for investors?
Blumenthal: It has all the characteristics of an environment that one should be investing in. Shrinking supply, increased demand translates into increasing rental rates, lower yield and higher property values, resulting in a vacancy rate sub 1%.
September 1, 2017
Partners Capital Buys Industrial Asset in 1031 Exchange
The following was originally posted on commercialpropertyexecutive.com
Aug 31, 2017 | Ariela Moraru
The purchase of the fully-leased 92,000-square-foot asset in San Bernardino, Calif., for nearly $8.7 million, marks the company’s sixth industrial acquisition in the past 18 months.
Partners Capital acquired a 92,000-square-foot industrial building in San Bernardino, Calif., from Savvy Intellect LLC for nearly $8.7 million. The building is fully leased to New York-based auto parts distributor Parts Authority and serves as its West Coast distribution hub.
Located at 535 E. Tennis Court Lane, the property has direct access to interstates 215, 15 and 10. Corporate neighbors include the warehouses and distribution centers of Amazon, Kohl’s, Pep Boys, Stater Brothers, Mattell, Pepsi Co., Pactiv, Kohler and Burlington Coat Factory. Remington Moses, a principal of Lee and Associates in the firm’s Gardena office, represented Partners Capital in the transaction, while Guss Andros, executive vice president in Daum Commercial’s Ontario office, worked on behalf of the seller.
Partners Capital acquired the property as part of a 1031 exchange, following the disposition of two brick-and-mortar retail assets in San Francisco and Las Vegas. This marks the sixth industrial acquisition over the past 18 months for the company, which targets buildings under 200,000 square feet in Southern California. Investment in industrial properties represents a strategic retail play for Partners Capital, according to Vice President of Acquisitions Mark Blumenthal. He noted that, since Millennials who tend to shop online begin to outnumber baby boomers, the e-commerce boom will fuel demand for well-located distribution and fulfillment centers. This will help push industrial vacancy to record-low levels, according to the 2017 U.S. Industrial Midyear Outlook report from Marcus & Millichap.
“The market is extremely tight for small to mid-cap retailers who want to lease or own their own buildings,”said Bobby Khorshidi, president of Partners Capital, in a prepared statement. “Much of the new inventory being built is targeting multi-national retailers with space requirements of 300,000 square feet or larger. This has created an attractive investment opportunity.”
The vacancy rate for industrial properties in the Inland Empire has hit a record low of 3.8 percent in the second quarter, according to a Colliers report. The two-county area had the highest absorption in the Greater Los Angeles area at 4,696,500 square feet.
To read the full article please Click Here
May 11, 2017
Bobby Khorshidi Featured in National Real Estate Investor Article
The following was originally posted on nreionline.com.
May 10, 2017 | Beth Mattson-Teig
Lower rates fuel demand
Bridge loans are typically priced off LIBOR. So the recent Fed rate hikes on the federal funds rate have not had an impact on bridge lending rates. Most of the bridge loans Grandbridge arranges are for non-bank, non-recourse institutional deals on core, core-plus and value-add projects with pricing ranging from 250 to 700 basis points over LIBOR. The rate varies depending on the leverage, overall structure of the deal and strength of the sponsor and asset. A very complicated deal or a difficult asset to finance generally fall on the higher end of that spectrum, notes Tapie.
The lower rates are fueling more borrower interest in obtaining bridge loans. Yet rates can only go so low. Rather than competing solely on rate, some bridge lenders are finding that they have to work harder to win deals. Some firms are widening their target markets and doing deals in smaller metros and on different property types, or stepping outside of standard underwriting protocols.
“There are more players entering the market than exiting, and you are finding lenders trying to differentiate themselves to fend off some of the competition,” says Bobby Khorshidi, president and principal of Archway Fund, a non-bank bridge lender that focuses primarily on the Western U.S. with bridge loans ranging between $2 million and $20 million.
Lenders look for an edge
Some lenders are differentiating themselves by focusing on a niche product or property type, and in some cases they are relaxing underwriting standards to gain a competitive edge. For example, some bridge lenders are raising loan-to-value ratios (LTVs) to win deals or stretching on rent and pro-forma assumptions, says Khorshidi.
Lenders are also going into secondary and tertiary markets where there is less competition and rates are higher. “We are trying to stay true to our knitting and not chase deals in markets where we don’t feel comfortable,” says Snyder. That being said, Meta West did open its Chicago office two years ago and is now more actively looking at deals in the Midwest, especially with sponsors that the firm has worked with in the past. The company also has offices in Los Angeles and New York City.
Archway Fund has been doing bridge lending since 2009. One of the ways it has been able to maintain its lending volume amid competitive pressures is by leveraging existing relationships. “Relationships are of the utmost importance in our space,” says Khorshidi. If there are five buyers lined up for a deal, buyers are trying to distinguish themselves by saying they can move quickly on closing the transaction. They want to sit across the table from a lender and talk to the decision maker, and not be caught up in red tape and bureaucracy that can slow the underwriting process, he says.
To read the full article, please click here.
Partners Capital’s New Acquisition of The Village at Centennial Springs Featured in Las Vegas Review-Journal
A mixed-use property with retail, offices and housing, The Village was launched during the bubble years last decade. And like countless other projects from that era, it ran into steep problems when the economy crashed. Investors now are betting that its darker days are behind it. Los Angeles real estate firms Partners Capital and the Robhana Group have bought The Village’s retail space, as well as other commercial property and its neighborhood park and vacant lots, for $6.7 million.
Partners Capital founder Bobby Khorshidi said his group hasn’t decided what to do with the property, including the vacant parcels they acquired. He said they picked up about 45,000 square feet of commercial space at The Village, including retail, offices and some condos above the storefronts, and the holdings are just over 90 percent occupied. When Rialto acquired the property through foreclosure in 2012, it was about 40 percent occupied, said listing broker Phillip Dunning of Colliers International.
The Village is located off Farm Road near Durango Drive in the northwest valley. Asked how it competes for tenants and foot traffic with mixed-use centers like Town Square Las Vegas, Downtown Summerlin and The District at Green Valley Ranch, Khorshidi said it doesn’t but that he’s “flattered by the comparison.” Those projects are “substantially larger” than The Village and cater to residents from around the valley as well as tourists, he said. Their tenants also are “large retailers and corporations.” His tenants are locally owned businesses, and The Village caters more to the surrounding community, he said.
One tenant is The Vault Bicycle Shop, which Skoy opened two years ago. When he first signed his lease, he had seven or eight storefronts to choose from in the main retail drag, Norman Rockwell Lane. Only a handful of tenants were there, he said. Foot traffic since has picked up in The Village, he said, and almost all of the retail space is now occupied.
To read the full article, please click here.
May 5, 2017
Feature on Bisnow: This Week’s LA Deal Sheet
The following was originally posted on Bisnow.com.
Dec 20, 2016 | Karen Jordan
Partners Capital recently purchased a 14k SF industrial building at 12820 Panama St in Del Rey for $4.5M in an off-market deal. Partners Capital president/principal Bobby Khorshidi told Bisnow a JV between Partners Capital and another firm bought the property. It was bought from a family trust. Teledyne is the tenant. Its lease is expiring soon, and the rents are below market, Khorshidi said.
The entire block is in the midst of being redeveloped. “The property is a long-term hold for our company,” he said. “This acquisition represents a continued shift in our acquisition criteria from mostly retail to industrial/flex in line with consumer spending habits.” Khorshidi said his firm is seeing an increased demand for industrial properties and a diminishing supply of them in SoCal. The site is adjacent to 12870 Panama St, which was recently purchased by Ocean Charter School for $20M and will be redeveloped.
To read the full article, please click here.