Behringer Harvard’s Industrial Acquisition in Southern California Capitalizes on ‘Market Stress’

Behringer Harvard’s Industrial Acquisition in Southern California Capitalizes on ‘Market Stress’

In a value-added play, Behringer Harvard Opportunity REIT II and CT Realty Investors have jointly acquired the Interchange Business Center in San Bernardino, Calif., for $30 million. IBS Industrial Properties LLC was the seller. The property is 29% leased to two logistics and warehousing tenants: FTDI Supply Chain Management and Genco. Built in 2007, the property is situated on a 41-acre site in the Inland Empire industrial market east of Los Angeles.

The four-building, Class-A industrial property contains approximately 802,000 rentable sq. ft. “Interchange Business Center provided us with an attractive opportunity to capitalize on current market stress by acquiring Class-A industrial space in a recovering market at a significant discount to replacement cost,” remarked Samuel Gillespie, chief operating officer of Behringer Harvard Opportunity REIT II, a non-traded real estate investment trust. “With its strong Inland Empire location and superior quality of construction, we believe this property offers strong upside potential.”

Through its various investment programs, Dallas-based Behringer Harvard has interests in or manages more than $10 billion in real estate assets. CT Realty Investors, headquartered in Aliso Viejo, Calif., has completed more than 200 transactions with value in excess of $2.5 billion through a series of 10 independent discretionary private equity real estate funds.

The focus of CT Realty’s investment activities is to acquire well-located assets with the potential to enhance their value through a solid, hands-on management approach. Carter Ewing, executive vice president of CT Realty Investors, says the purchase of Interchange Business Center fits that description. “This acquisition complements our growing portfolio of Inland Empire industrial properties and speaks to our ability to source compelling off-market opportunities.”

Interchange Business Center is strategically located in San Bernardino County, which is part of the broader Inland Empire, the trade gateway of Southern California. The property is approximately six miles north of the BNSF Intermodal Facility that transports warehouse goods to and from the ports of Long Beach and Los Angeles.

The site provides direct access to the I-215 and newly completed I-210 freeways, which lead directly to the I-15, I-10 and State Route 60 freeways, all of which are major transportation routes serving Southern California and the Western United States.

On a roll

The acquisition of Interchange Business Center is the third joint venture between Behringer Harvard and CT Realty Investors. The joint venture now holds more than 2.4 million sq. ft. of industrial space.

In August, Behringer Harvard and CT Realty Investors acquired the Archibald Business Center in Ontario, Calif. for $9.5 million. The Archibald Business Center is a corporate headquarters and industrial warehouse facility comprising approximately 231,000 sq. ft.

Also in August, Behringer Harvard acquired a 16% interest in the El Cajon Distribution Center, a 1.4 million sq. ft. industrial warehouse complex in San Bernardino. Behringer Harvard made the investment through a joint venture with several entities, including: CT Realty Investors; Westcore Properties, a real estate investment and management company based in San Diego; and Pacific Coast Capital Partners, an El Segundo, Calif.-based real estate investment firm.

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