CapRock Partners, a premier private industrial investment and development firm based in Newport Beach, reported significant investment activity between June and September with the acquisition and sale of eight total assets valued at $250 million. In July and August, CapRock acquired approximately 1,250,000 square feet in four industrial real estate assets valued at $128 million located in California, Nevada and Arizona for value-add or ground-up development. This brings the company’s total investment and development pipeline since its founding to 14 million total square feet valued at $1.7 billion. Complementing its acquisition efforts, CapRock also successfully completed the business plan of four key Southern California assets this summer, selling nearly 850,000 square feet for a total of $123 million.
“In only 9 years since our first acquisition, our team has made remarkable strides and has earned a strong reputation in the Western United States as a premier industrial investor and developer,” said Jon Pharris, co-founder and president of CapRock Partners. “As we advance into our next chapter, our team is more energized than ever to continue our growth on both the value-add platform and development platform.”
The four recent acquisitions include:
Raymer (value-add): CapRock acquired 2009-2011 Raymer Ave., a 126,413-square-foot industrial campus in Fullerton, Calif., in an off-market transaction. A strategic addition to the firm’s value-add portfolio, the property was in a functionally obsolete condition at the time of purchase. CapRock will begin transforming the property this fall by adding dock doors and additional office space and creating a sense of arrival by improving the building’s exterior and enhancing curb appeal, among other improvements. Construction is scheduled to wrap in the first half of 2020.
Interchange Industrial Center (ground-up development): CapRock acquired a 33-acre parcel in North Las Vegas, Nevada, where it plans to build a 683,436-square-foot industrial complex – the firm’s first ground-up development outside of California. The two-building project is named for its location fronting the I-15 and 215 Interchange and provides immediate interstate freeway access. Other features include 36-foot clear building heights, cross-dock loading, 100% concrete truck courts and 115 trailer parking stalls.
Otay Mesa (value-add): Another addition to its value-add portfolio, CapRock acquired 1855 Dornoch Ct., a 211,269-square-foot industrial building located within the Otay Mesa area of San Diego. Along with other renovations, CapRock will enhance the property’s functionality by removing second-story office space, adding up to seven dock high doors, and re-configuring the parcel to accommodate excess parking stalls. With ample power, 26 to 28-foot clear heights, 13 dock doors and one grade-level ramp, the facility can accommodate warehouse/distribution and light manufacturing uses.
Papago Distribution Center (value-add): CapRock closed escrow on a 226,436-square-foot, Class A industrial property, known as Papago Distribution Center in Phoenix, Arizona. The project is fully leased on a short-term basis with rental rates that are significantly below market. Upon the lease expiration CapRock will implement a value-add strategy to transform the property for the needs of Fortune 1,000 type companies in one of the premier submarkets in Phoenix.
The dispositions include:
800 Iowa (value-add): CapRock sold the 310,000-square-foot institutional-quality industrial building in Riverside, Calif. to a high-net-worth investor in an unsolicited off-market transaction. The property is 100% leased by Rust-Oleum, a wholly owned subsidiary of RPM International (NYSE: RPM). CapRock’s vision for the investment property came to fruition when Rust-Oleum renewed its lease for a new 10-year term in 2018. CapRock had previously sold the neighboring property in 2016, which was on a separate parcel.
Vista (value-add): As part of its value-add strategy, CapRock sold 1395 Park Center Drive, a 155,069-square-foot freestanding industrial business center in Vista, Calif., to an institutional investor. CapRock acquired the property in January 2018 and initiated a comprehensive improvement plan to enhance the property’s aesthetic and functionality, and promptly leased 100% of the asset to ShipCalm, a third-party logistics and fulfillment service company.
Serrano Business Park (ground-up development): Upon developing and completing Serrano Business Park, a new, three-building 332,000-square-foot industrial center built from the ground up in Jurupa Valley, Calif., CapRock sold the institutional-quality Class A facility to GreenCycle, a global waste and recycle management company. Serrano Business Park consists of 18 acres within the heart of the Inland Empire, one of the most highly sought-after logistics markets in the U.S.
La Palma (value-add): CapRock sold this 43,313-square-foot value-add office facility to a private investor. Located at 4175 E La Palma Avenue in Anaheim, Calif., this asset is part of a larger three building industrial and office campus known as La Palma Business Center. The property is 100% leased.
Company Growth, Expansion into New Markets
With its various partners, CapRock is currently under construction on more than 4 million total square feet in California and Nevada and will be under construction on an additional 4 million square feet in 2020. Notably, CapRock is developing the largest single industrial development project in the U.S., a 3-million-square-foot industrial development in Ontario, Calif. named Colony Commerce Center. CapRock entitled and sold the underlying land to global real estate investor Ivanhoé Cambridge and was retained to serve as the on-the-grounds development specialist through the project’s completion. Phase I is scheduled to complete in Q4 2019, with Phase II now underway.
The firm also is in escrow on five additional value-add projects totaling nearly 650,000 square feet, with a total capitalization in excess of $60 million. The assets are located in key submarkets in California, Arizona and Nevada which CapRock will be acquiring throughout several months. A few of the projects are new construction and well positioned to cater to high-caliber distribution and last-mile logistics buildings.
“Land constraints, soaring land prices and development obstructionists are real barriers to entry in Southern California, which keeps a glass ceiling on new development and results in strong rent projections for years to come,” said Patrick Daniels, CEO of CapRock Partners. “U.S. consumers are becoming more reliant on same and next-day delivery, putting more sustained pressure on demand for new state-of-the-art logistics facilities from e-commerce corporations.”
