I recently had the opportunity to lead our acquisition of the SiteOne Landscape Supply anchored industrial facility located at 74991 Velie Way in Palm Desert, CA. This acquisition illustrates our strong desire for industrial properties as well as our openness to multi-tenant assets.
During my initial conversations with the seller, we discussed her primary concern and source of hesitancy: the significant capital gains tax exposure she would be liable for. While she was interested in hearing what we had to offer, she made it clear that she was undecided on whether she wanted to hold or sell the property. We agreed that it would be beneficial to discuss a specific offer as it would allow her to gain clear, definitive insight into her tax consequences and appropriately weigh her options.
We were initially drawn to this property because of the 1.27-acre, corner lot. As industrial facilities have seen increased demand over the past couple of years, both investors and tenants have placed an emphasis on locations that offer ample outdoor storage space. This property perfectly illustrates this trend, as more than half of the lot is dedicated to outdoor storage space for SiteOne. As for the market, Palm Desert is densely populated with strong demographics and high consumer demand for tenants like SiteOne.
While there are many fundamental strengths associated with the property, it is not one that a typical 1031 Exchange buyer would seek out. Approximately 36% of the building is leased to two local tenants, P.C. Construction and Stonework and La Cocina de Mama Margarita. Additionally, all three tenants are on gross leases, making this a management intensive property. We also made significant investments from a capital improvements standpoint, as we replaced the roof, HVAC systems, and repaved the parking lot.
Overall, this transaction was opportunistic for both Ocean Block Capital and the seller. For Ocean Block Capital, this acquisition aligns with our focus on growing our industrial portfolio, as well as our overall footprint in Southern California. We are excited to add this highly sought-after industrial anchored facility to our portfolio and plan to hold the property for the long term.