Shidler Takes $142M Portfolio, Sells Office Tower

SAN DIEGO-The Shidler Group wasted little time in the new year with a major portfolio acquisition and the sale of a trophy office property in deals with West Los Angeles-based Arden Realty Inc.

In the first deal, the Shidler Group acquired a 19-building, 1.1-million-sf portfolio of office and R&D properties located in San Diego and Los Angeles. The portfolio purchase carried a $142-million price tag. The acquisition is the third major portfolio buy of the past 12 months for the Shidler Group, according to Matt Root, a partner with the company. In all, the company had more than $1 billion in acquisitions over the past year. “We continue to find tremendous value in Southern California,” says Root, who points to the area’s diversified economy and improved business climate, as reasons for his company’s bullishness.Root tells Globest.com that “Arden was making a decision to basically dispose of its non-core assets. Their strategy is to hold class A properties in their core areas.” According to Root, the portfolio acquired by the Shidler Group is comprised of B and B-plus properties. “These are suburban properties and most of them have freeway access.” He says the properties have been accumulated by Arden over the last 10 years and the Shidler Group has plans to spend money on repositioning them.The portfolio is 90% leased and counts more than 250 tenants. “We liked that the portfolio had both geographic diversity as well as great tenant diversity,” says Root. He says the biggest risk is with the rollover of tenancy. “We understand there are a fair amount of leases coming due, but we’re willing to assume that risk and reposition the properties and make them shine.”Of the portfolio, 10 of the buildings are located in three business and technology parks in San Diego: Activity Business Center includes five buildings totaling 156,887 sf; Morehouse Tech Center I, II & III includes three buildings encompassing 182,127 sf; and Waples Tech Center I & II counts two buildings totaling 27,974 sf. The remaining nine buildings are located in the Greater Los Angeles area: Long Beach Properties counts two buildings totaling 131,265 sf; South Bay Tech Center is two buildings containing 106,106 sf in Torrance; Whittier Financial Center is two buildings encompassing 143,339 sf; 91 Freeway Center is one 91,295-sf building in Artesia; Glendale Corporate Center is a 114,450-sf property; and Norwalk Corporate Center is a 121,145-sf property. Secured Capital Corporation represented both sides in the deal. In the second deal, the Shidler Group sold Washington Mutual Tower to Arden Realty for $48 million. Located at 707 Broadway in the central business district of Downtown San Diego, the property counts 180,000 sf with a 12-story, 792-stall adjacent parking structure. The Shidler Group purchased the building in September 2003 for $35 million. “This was a smart buy for Arden,” says Root. “They already own 701 Broadway, which is two blocks over from Washington Mutual.”The property is 95% leased and major tenants include Washington Mutual Bank, the City of San Diego Attorneys’ office, Inter@activate, the law firm of Lowell & Robbin, engineering firm Parsons, Brinckerhoff, MCI WorldCom and public relations firm Nuffer, Smith, Tucker. “We have successfully executed our business plan of renovating and leasing this high-profile property,” says Root. “The continued gentrification of the East Village and ongoing revitalization of Downtown San Diego will continue to enhance the long-term value of this property.” Adam Edwards of Secured Capital Corp. represented both the buyer and the seller in the deal.