Kearny Real Estate

SELECT:

Westside Business Centre

In June 2000, Kearny acquired 56 acres of Westside Business Centre in Temecula, for $7.6 million ($3.14 psf). The acquisition, Kearny’s second in Temecula, followed the successful absorption of the vacant 42301 Zevo Drive building. The 56 acres were the last remaining in Westside Business Centre, a 385-acre park located strategically in south Riverside County with direct I-15 access via Winchester Drive. Absorption of the property was completed in five years. Within four weeks of purchasing the land, Kearny signed a letter-of-intent with The Scotts Company for their 412,580 sf build-to-suit requirement. Kearny sold The Scotts building in March 2002 for $26.8 million ($64.96 psf), which set a record per square foot price for an industrial facility in Riverside County. Land sales included 4.75 acres in November 2002 at $5.07 psf, 8.5 acres in January 2004, 6.7 acres in May 2004 and 5.4 acres in March 2005. The final sale at $10.25 psf set the high water mark for an industrial lot sale in the Temecula Valley. In underwriting land development opportunities, Kearny generally assumes that 50% of a project will be sold as finished parcels to developers and/or users over a reasonable time period, and 50% of the property will be developed with speculative and build-to-suit projects. Actual execution of Kearny’s business plan varies as the market and risk/reward tradeoffs dictate, but experience has taught us that a combination of land sales and development, both build-to-suit and speculative, is a prudent way of balancing the risk and rewards of land development. At Westside Business Centre, 45% of the property (25 acres) was sold to developers via land sales and 55% (31 acres) was developed and sold. 22.5 acres were developed as a build-to-suit for The Scotts Company, and speculative development of Remington Business Center was completed on the remaining 8.3 acres.