Fortress quietly assembles SoCal industrial portfolio

Fortress Investment Management has spent the last eight months quietly assembling a substantial portfolio of industrial properties across Southern California, The Real Deal has learned.

The New York-based private investment manager has spent at least $259 million on small industrial sites in Los Angeles, Orange, San Bernardino and Riverside counties since June of last year, according to a TRD review of property records filed with each county.

Fortress did not respond to a request for comment.

Fortress used an initial $300 million loan from Deutsche Bank to purchase some of the properties, loan documents show. The loan, first provided in June, was increased to $400 million in October 2021.

This month, Deutsche Bank provided Fortress with another $250 million loan, and some of the proceeds have already been used to buy assets. Deutsche Bank did not respond to a request for comment.

Softbank-owned Fortress bought the properties through multiple limited liability companies with names starting with “CREF3,” records show. The company has previously used the same acronym to purchase hotel properties, including the Frenchman’s Reef Marriott in St. Thomas in the U.S. Virgin Islands.

The deals come amid a booming industrial market that is showing no signs of slowing down. Investors spent a total of $20 billion on industrial properties in Los Angeles County, the Inland Empire — made up of Riverside and San Bernardino counties — and Orange County last year. That’s almost double the amount that was spent in 2020 and $5 billion more than what was spent in 2019, according to CBRE.

Read more

Los Angeles

SoCal tops nation for commercial investment in 2021

New York

Hidden Fortress: Behind SoftBank's $3.3B buy of the asset manager

In Orange County, the company spent about $134 million on 10 properties in Irvine, Santa Ana, Anaheim Platinum Triangle and Costa Mesa from July through this month, according to property records.

The company’s most expensive deal in Orange County was its $26 million purchase of a five-acre site at 3128 Red Hill Avenue in Costa Mesa, a Class B industrial property.

In Los Angeles County, Fortress bought at least nine properties from June of last year through this month for a total of $126 million. The properties were spread out across mostly industrial areas across the county — in Carson, Downtown Los Angeles, Inglewood, Wilmington, Chatsworth, Hacienda Heights and Compton.

Most of the properties were bought from longtime property owners who also occupied the sites.

Fortress purchased one property at 336 West 31st Street from Jack Rimokh, the chief executive officer of Los Angeles handbag licensor Signal Products, in a sale-leaseback deal, meaning Signal Products will keep occupying the space for the remainder of its lease.

It’s unclear whether Fortress will renovate or demolish the properties, once some of the existing leases are up. Deutsche Bank’s financing did not include provisions for construction.

Fortress has sold off assets in California in recent years, including a 225,000-square-foot office campus in Glendale it owned with Rising Realty. The firm sold it in April of last year for $79 million to Gemdale USA.