As we have noted in our past posts, it appears that the commercial real estate market in Southern California has come back. And with such real estate at a premium, large private equity groups are purchasing warehouses, vacant retail locations and office buildings ostensibly with the anticipation that values will consistently increase.
A prime example of this was recently noted in the San Diego Union-Tribune. Washington, D.C. based private equity firm, The Carlyle Group, recently purchased eight buildings in the Grantville neighborhood in San Diego.
The purchases included two office buildings on Fairmont Avenue totaling nearly 50,202 square feet of space, and two other office buildings on Mission Gorge Road with 58,986 square feet. Carlyle also bought four warehouses in Mission Industrial Park with more than 54,000 square feet. The office buildings boast high profile businesses that include a construction company, a psychiatric center, an elder assistance company and a technology company.
The overall purchase price was $25.5 million. Indeed, it was less than Carlyle’s previous commercial real estate purchase in 2014 where it bought an elder housing complex for $27 million. Carlyle currently manages more than $180 billion in properties.
While the financial structure of the deal was not revealed, the purchase exemplifies the need for experienced legal counsel to review the fine points of such a purchase and to explain to the parties the legal ramifications of such a purchase. It remains to be seen when Carlyle will make another purchase in San Diego County.