Ares pays $60M for IE industrial building in quick flip

Industrial is still hot — so much so that Ares Management was willing to pay $18 million more for a property than it last traded for four months ago.

The Los Angeles-based alternative investment management firm bought a 205,600-square-foot warehouse in the Inland Empire city of Perris for $59 million, according to Carol Taubman, who runs brokerage Westgate Industrial Properties.

Ares acquired the warehouse, located at 100 Walnut Avenue, from a limited liability company named 100 Walnut. California state records show the entity is linked to Eran Bitton, the CEO of Ring of Fire, a clothing manufacturer based in Van Nuys.

The entity had bought the property in August for $41 million from the developer, Dedeaux Properties. At the time, the building was vacant.

100 Walnut LLC leased the property to third-party logistics firm GPA Logistics Group for three years, before selling it to Ares.

GPA is paying $1.33 per square foot a month on the property, with 4 percent annual increases. The firm has one option to extend the lease on the property for five more years.

Industrial real estate — one of the most high-yield asset classes in the pandemic — has cooled in recent months, as rising interest rates and high inflation have slowed commercial acquisitions across the board.

Vacancy rates are still extremely low in the Inland Empire, but ticked up for the first time on a quarterly basis from July through September of this year, according to Savills. About 1.5 percent of all industrial space in the Inland Empire, which encompasses Riverside and San Bernardino counties, was available in the third quarter, up from 1.2 percent in the prior period.

Ares has bought a number of industrial properties in the Southern California region over the last two years. In July, a subsidiary of the firm bought a three-building warehouse in Commerce for $50.3 million.