Fund Buys Industrial Park for $67 Million

Pension fund advisor RREEF Funds has purchased northern Orange County’s 1.25-million-square-foot Fullerton Crossroads industrial park from Legacy Partners Commercial for nearly $67 million.

The Chicago-based firm’s acquisition of the former Hunt-Wesson tomato-canning facility shows that institutional investors remain active buyers of well-located Southern California income properties despite softening tenant demand.

Foster City-based Legacy Partners purchased the Hunt-Wesson property about three years ago for an estimated $40 million, then added five buildings totaling more than 500,000 square feet. The project at Gilbert Street and Malvern Avenue is 97% leased, according to RREEF Vice President Scott Stuckman.

Rents at Fullerton Crossroads range from just more than 40 cents to nearly 50 cents per square foot monthly. ConAgra Grocery Products Co. (formerly Hunt-Wesson) remains the biggest tenant. Other large tenants include Cargill, International Merchandising Service and T-Shirt City, each with more than 100,000 square feet.

Shawn Kelter and Grubb & Ellis colleague Michael Merk, along with Jay Borzi and Steve Silk of Secured Capital Corp. of Los Angeles, brokered the Fullerton Crossroads sale. The property is one of several large, aging single-user manufacturing facilities in the Southland that have been converted into multi-tenant industrial parks.

Leasing and sales of industrial property in Orange County have tailed off this year with the slowing economy, according to regional brokerage Colliers Seeley. The firm projects that industrial-property vacancy rates in Orange County will rise to moderate levels in the months ahead.

Grubb & Ellis’ Kelter said demand for larger buildings in particular is perhaps 50% off previous levels all across the Southland. But rents, which rose substantially through early last year, haven’t declined much, as little new industrial product has hit the market.