On January 27, 2023, Dornin Investment Group (“DIG”) acquired a 65,234 SF dual tenant industrial building off-market for $16.35M ($251/SF) at 7272-7274 Lampson Avenue in Garden Grove, California.
DIG is targeting to acquire $300M of light industrial assets in California, Nevada, and Arizona over the next 24 months. The transaction follows DIG’s recent $22M, 46% IRR, and 2.75x Equity Multiple success in Laguna Beach, California and represents DIG’s first with JV Partner, Sundance Bay of Salt Lake City. DIG is evaluating several off-market opportunities and looks forward to executing its light industrial pipeline in 2023.
Centrally located in Orange County off California SR 22, the property sits within the strong Garden Grove industrial submarket. The property was built in 1978 and is 100% leased, sitting on a corner with high drive-around visibility. Both tenants have gated yards, truck wells, and roll-up doors. The majority tenant has 7,200 SF of covered canopy space and front-loading access. Rent for both tenants is on average 37% below market. Philip Smith, Director of Acquisitions at DIG, stated, “Light industrial supply constraints including competition for higher and better uses, high replacement costs, and older vintaged product becoming obsolete give ample support to this property with convenient access to greater Los Angeles.”
DIG overcame multiple complex hurdles with respect to deal structuring. Strategic sale-leaseback considerations were contemplated given the majority tenant had direct affiliation with the seller. Challenging debt markets were overcome by a through a seller-carry structure. Equity was partially originated from a separate account utilizing 1031 exchange capital, which further complicated the capitalization stack. Ultimately, DIG’s creativity prevailed and lead to execution success. Smith continues, “Creativity brings great opportunity in this market and we were able overcome significant challenges to close this deal. Lance and his team at Sundance Bay understood the complexity and stuck with us through the acquisition. We look forward to executing with them again.”
Kevin MacKenzie and John Marshall at JLL Capital Markets arranged the DIG-Sundance Bay partnership. Brock Stryker, Guy Laferrara and Travis Barnett of Lee and Associates represented DIG and Andy Friedman represented the seller, a California based company. Mark Nicoletti, Maxwell Shapiro, and Olivia Fox of Allen Matkins provided legal expertise. First American Title Company provided title and escrow services.
About Dornin Investment Group
Dornin Investment Group (“DIG”) is a fully integrated real estate investment firm with offices in Laguna Beach, CA and Las Vegas, NV. DIG invests in commercial and residential real estate across the capital stack in partnership with a broad base of institutional and private investors. The firm specializes in distressed, opportunistic, and value-add investments in all major property types with a focus on office, flex, industrial, multifamily, and hospitality properties in addition to non- and sub-performing loans. DIG’s full-service investment platform includes asset and property management, leasing, design, construction management and capital markets advisory services through its wholly owned subsidiary, Dornin Realty Advisors. For more information, visit www.dorningroup.com.
About Sundance Bay
Sundance Bay was founded in 2012 with an investment in two small multifamily assets. Since then, Sundance Bay has significantly expanded its multifamily portfolio and launched Senior Debt and Net Lease Investment verticals nationwide. Sundance has $3.6B in total capitalization and $2.3B assets under management. The firm has $4B combined acquisition and development experience and 150+ years of combined team experience across 75 team members. For more information, visit www.sundancebay.com.