Magellan Storage Torrance
In 2000, Magellan acquired an industrial property consisting of three buildings with approximately 209,000 SF of rentable space located at 4300-4320 W. 190th Street in Torrance, California. The property had an excellent location but was an older, class B, vacant industrial facility that had been overlooked due to some historic environmental issues.
This 8.6 acre, 209,000 SF industrial property was a manufacturing facility for the Standard Brands Paint Company in northwest Torrance. Standard Brands went through bankruptcy and this asset had been foreclosed on by Transamerica, one of the firm's creditors. Transamerica was unable to sell the asset because of lingering environmental issues. The property was located on 190th Street, adjacent to Hawthorne Boulevard, the primary retail corridor in the South Bay submarket of Los Angeles. The opportunity required a rapid response.
Magellan's experience in handling environmental issues and ability to move rapidly proved a significant competitive advantage. Magellan accepted the seller's asking price and agreed to waive the environmental contingency within two weeks. The environmental risks proved to be manageable and Magellan proceeded with an expedited closing.
Given its superb location, the property had enormous potential. The original business plan called for the redevelopment of the property into a multi-tenant industrial park, with further potential for the conversion of one of the buildings into a self- storage facility, subject to obtaining a Conditional Use Permit (CUP). While initiating this plan, housing developers began making offers on the property. However, Magellan concluded that the entitlement process for housing was too long and uncertain, and that the original business plan provided the best risk adjusted return for its investors. Specifically, that plan involved converting the 108,000 SF building into a multi-tenant industrial facility and converting the 86,000 SF building into a 126,000 SF, two-story self-storage facility. In addition, separate parcels were created for the industrial and self storage assets for exit flexibility down the road.
Self-Storage – For the self-storage conversion (Magellan's first), Magellan assembled an outstanding development team that included the most recognized architect in the self-storage industry, a very experienced self-storage contractor and a construction manager who had formerly worked for Public Storage. The unusual shape of the building (triangular), the existence of a curved rail spur on its eastern side and inadequate ceiling clearance all created significant development and construction challenges. However, the team successfully completed construction and subsequently enjoyed significant industry acclaim as it was awarded the MiniStorage Messenger's “2004 Facility of the Year” award (in the construction category).
The project rapidly reached stabilization and was successfully refinanced in 2006 with a 10 year loan. All of the original equity capital was returned. In 2016, Magellan Storage – Torrance was one of the flagship components in the portfolio sale of Magellan Storage to one of the industry’s primary self storage REITs.