Chesnut Properties Takes $91M Loan for Industrial Project

Chesnut Properties has received a $91 million construction loan for the completion of Gillespie Field iPark, an approximately 380,000-square-foot industrial facility at 1756 Weld Blvd. in El Cajon, Calif., in eastern San Diego County. 3650 REIT provided the financing.

Based in Solana Beach, Calif., sponsor Chesnut Properties develops a variety of asset types, including industrial, life science and office properties. 

The lender’s Bridge and Event-Driven lending platform originated the 24-month note. Senior Director Peter Hillakas and Director Drit Shoemaker of Gantry Inc. arranged the financing.

Upon delivery, Gillespie Field iPark will feature clear heights from 28 to 31.5 feet, dock-high and grade-level loading doors, and 650 stalls for parking spaces, including 34 trailer-storage stalls. The property is being built to maximize the use of renewable energy and so will feature a solar roof and EV charging stations.

READ ALSO: A Recap of the Industrial Sector’s Performance

About 40 percent of the building is preleased to GKN Aerospace, and the remainder will accommodate a range of industrial tenants including manufacturing, R&D, warehousing and distribution.

The 31.5-acre site is adjacent to the Gillespie Field airport, on a long-term ground lease from the County of San Diego. Developable space within the El Cajon submarket is limited, making the property one of the few offering modern features and opportunities to lease space of more than 100,000 square feet, according to 3650 information.

In a prepared statement, Lee Chesnut, CEO of Chesnut Properties, described Gillespie Field iPark as a challenging project, since the developer began construction with their own capital in a very difficult capital markets climate.

Slow at the moment

3650 REIT co-founder & managing partner Jonathan Roth added that in a commercial real estate environment with little ground-up construction taking place, there is a strong demand for a variety of asset classes in strategic locations and desirable submarkets, and that the Gillespie project will provide the modern infrastructure that older properties in the East County San Diego area lack, fulfilling the need for sustainable industrial space amid the market’s tight inventory.

The third quarter saw San Diego County’s industrial/flex space market hit three straight quarters of negative demand, which has added up to a bit more than 1.5 million square feet of negative net absorption, according to an October report from Colliers. Nonetheless, the overall vacancy for industrial space (excluding flex and life science) is still below 4 percent.

In April, Rexford Industrial Realty Inc. acquired two adjacent properties, at 9223-9323 Balboa Ave. and 4285 Ponderosa Ave. in San Diego, from Cubic Corp. in a $200 million sale-leaseback. The properties are a 100,000-square-foot office building and a 55,000-square-foot industrial facility.

3650 REIT has also recently originated a more than $54 million construction loan for The Ranch at Model Colony, an approximately 200,000-square-foot retail project in Ontario, Calif. And last fall, the company provided a $71.5 million loan for the acquisition of Creekside Town Center. Cane Cos. Management purchased the 10-building retail power center in Roseville, Calif., in metro Sacramento, Calif.