888 Disneyland Drive

Completely vacant to 98% occupied in 3 years.

The Opportunity

This 100,000 square foot, five-story building in Anaheim had been vacant for seven years after being seized by the California Department of Transportation as part of a freeway widening project Due to the decreased size of the property’s parcel after the freeway widening, the parking ratio for the building precluded any tenants from obtaining occupancy permits for the building. However, the property had been purchased by an investment group that had started the process of securing a conditional use permit to allow tandem parking. Although the group had made headway with the processing, they were not located in the immediate area.

 

Milan recognized the attractive opportunity the property offered and convinced the investment group to sell the property by presenting a non-refundable deposit and proposing a long escrow to allow the owners to find an exchange. During this escrow period, Milan moved into the building and took over. Even before close of escrow, Milan initiated an extensive $6M renovation and re-tenanting of the building, which continued until it reached full occupancy. In addition to the work associated with the re-tenanting the building, there were also entitlements gained for signage on the building facing the 5 Freeway, further adding to the value of the property.

 

The Results

Within three years of taking over the project, Milan had filled the building to 98% occupancy while avoiding leasing to the mortgage brokerage tenants that had become ubiquitous as a result of the housing bubble. Milan leased to quality credit tenants, and tenants in high growth industries like healthcare and insurance, while other landlords filled their building with high profile mortgage operators—some of whom Milan had rejected as tenants for the building. Soon, the sub-prime and other debt markets collapsed, yet 888 Disneyland’s occupancy remained intact and through the recession investors received average cash on cash returns of over 20%.

 

In 2016, with the property facing potential occupancy decreases of more than 70% due to expiring leases, Milan sold the property to an owner-user for a significant profit.  Over the 11.5 year hold period, investors achieved better than a 4x multiple on their investment.