Argosy Real Estate Partners Invests in South Street Anaheim Project
On January 31, 2017, Argosy Real Estate Partners IV, L.P. and its parallel Funds acquired a 20.5 acre infill site located at 901 E South Street in Anaheim, CA. The property is currently improved with a 356,187 square foot industrial building. AREP, in a joint venture with Shopoff Realty Investments, plans to reposition the site to residential use. Shopoff Realty Investments is an experienced land developer in the Southern California market. The property was acquired from a corporate seller at a favorable cost basis below comparable trades of industrial properties in the market and, therefore, offers downside protection through its current industrial use. The seller is an industrial user that is in the process of downsizing its Southern California operations.
The property is located in the Anaheim Colony Historic District, a desirable central Orange County location walkable to retail and entertainment amenities and with excellent access to commuting corridors. Demand for new residential for-sale and for-rent product is strong and a number of redevelopments in the area have been absorbed quickly. The infill location results in high barriers to entry for development of new product in the area. A number of public and private homebuilders are currently building on comparable infill Orange County sites and are actively seeking additional land positions in this highly constrained market.
The property’s existing industrial use provides risk mitigation if the repositioning business plan yields unfavorable results. With less than 2% total vacancy countywide and virtually no availability of large block industrial space, the partnership could feasibly adopt an alternative business plan of re-leasing the property or redeveloping with a new state-of-the-art industrial building. The seller currently occupies the property and will lease back the property for the first 15 months following acquisition.