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REIT Sells Its Only San Diego Asset

SCRIPPS RANCH, CA-The Koch Membrane Systems Building is acquired by Albor Properties III LP for $9.4 million from real estate investment trust iStar Financial. The building is 100% leased to Koch Membrane Systems.

By Amanda Paxson | Updated on November 15, 2005

(To read more on the industrial market, click here.)

SCRIPPS RANCH, CA-San Francisco-based iStar Financial has sold its only asset in San Diego, a 90,500-sf industrial building, for $9.4 million. Part of the Scripps Ranch Business Park, the property is 100% leased to manufacturing firm Koch Membrane Systems.Brent Wright and Doug Lozier of CB Richard Ellis represented the seller, with Scott Henderson of Grubb & Ellis/BRE representing the buyer, Albor Properties III LP. Wright tells Globest.com that the sale was a strategic move by iStar, which had just recently renewed a seven-year lease with its tenant. “They realized that the renewal was a value-enhancement and it was an opportune time to sell,” Wright says. The freestanding building was a build-to-suit for Koch, which manufactures water filtration devices. The company has occupied the building since its construction in 1979. Wright tells Globest.com that the new owner plans improvements to the industrial building, including some tenant improvements as well as replacement of the roof and HVAC systems. He notes that the building could easily be converted to a warehouse if the tenant decides to relocate.The buyers were aware of the potential to convert the building, Wright points out. “A possible exit strategy could be to convert the building or make it into a corporate headquarters or and R & D building,” he says.Koch Membrane Systems is one of a dwindling number of manufacturing companies to remain in the San Diego area in the face of steep increases in rents and cost of living raises over the last three to four years. “Manufacturing companies can’t afford the rents, and their employees can’t afford to live there,” Wright tells Globest.com.

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