How Buchanan Street Controls its Destiny

NEWPORT BEACH, CA—Moving from being a historical allocator of debt to focusing mostly on equity and acquiring institutional-grade assets allows Buchanan Street Partners more leverage, president Tim Ballard tells GlobeSt.com. We spoke with Ballard after the firm recently purchased Waterside, a two-building office property in the Inland Empire from a joint venture between Greenlaw Partners and Walton Street Capital, and discussed the appeal of this particular market and the reasoning behind the firm's shifting focus.

GlobeSt.com: What's behind your recent spate of acquisition activity?

Ballard: I don't know that we've been that much more active than last year, but we are becoming more active in regions like the Bay Area, where we have a project we're closing on right now, and the Inland Empire.

GlobeSt.com: What's appealing to you about the Inland Empire market in particular?

Ballard: We own two buildings in that market, one we bought in 2012 in Rancho Cucamonga and the one we just bought in Ontario. What we saw in 2012 was a market that was still relatively distressed, where vacancies were quite high, and we made that purchase at about $150 per square foot, which was an attractive cap rate. What's evolved since then is that the building in Rancho Cucamonga is 100% leased, and the Ontario building is 96% leased, so there's been a real change in market demand. It has absorbed most large blocks of class-A space, and we're bullish on future rental rates there.

GlobeSt.com: You have historically been an allocator of debt and have now moved to focus mostly on equity and acquiring institutional-grade assets. What's the reasoning behind this?

Ballard: It's a handful of things, going back to 2000 to 2007. Back then, the majority of what we did was act as equity partners for local operators. But we found over time that we felt much more confident to run assets and make appropriate decisions for investors, and it was a lot easier to control our destiny that way.  When you're serving as an equity partner, it's more like watching someone else drive the bus, and the process takes much longer. We will still partner with select operators, but that will be more the exception than the rule.

GlobeSt.com: What else should our readers know about your firm?

Ballard: We are active in markets including the Bay Area, the Inland Empire, L.A., Phoenix, Denver, Dallas and Houston. We're also buying a building in San Antonio, and we're looking at core-plus assets. Our goal is to add about $500 million worth of acquisitions through the end of this year. We've also closed loans in markets including Portland.