SFSP Property Spinoff Centers on California

NEW YORK â€”  The bulk of the property that Santa Fe Southern Pacific will spin off to shareholders is located in California, the company said Wednesday.

The Chicago-based company, which owns 1.3 million acres of land in California and 1.1 million in other states, announced Tuesday that it will spin off real estate worth $300 million next year into a new real estate investment trust as part of a restructuring. Most of the stock in the trust will be distributed to shareholders as a special dividend, the company said.

A company spokeswoman, Susan Saltzer, said only developed and income-producing real estate will be included in the transaction and that it has not yet been determined which properties will be placed in the trust. Some land outside California is expected to be included.

Significant amounts of the company’s developed property in California are in Orange and San Diego counties and in the San Francisco Bay Area, Saltzer said. The property to be spun off will include industrial real estate such as office buildings, light industrial and manufacturing buildings, low-rise office buildings and warehouse and distribution facilities, she added.

Though the properties are owned by Santa Fe Southern Pacific, they are leased to others. “We just collect the rent,� Saltzer said.

The company owns some of the most valuable undeveloped office, hotel and industrial property remaining in San Diego County. The crowning jewel of its holdings is a 21-acre parcel around the Santa Fe Depot downtown that has received planning approval for mixed-use development totaling 3.5 million square feet of buildings.

Development of the parcel began earlier this year when ground was broken for a $40-million, 335-room Embassy Suites Hotel, a joint venture of Santa Fe and the hotel chain. Construction may start early next year on Santa Fe’s planned 30-story, 550,000-square-foot office tower at Broadway and Pacific Highway that will be Great American First Savings Bank’s new corporate headquarters.

Santa Fe also owns 420 acres of prime land in Chula Vista fronting San Diego Bay where the company has proposed a sprawling complex of hotel, office, industrial and residential buildings. Santa Fe is battling opposition from environmental groups in its efforts to develop the site.

Santa Fe owns or plans to build more than 500,000 square feet of industrial buildings in the Miramar Road and Kearny Mesa areas of San Diego.

Staff writer Chris Kraul contributed to this story.