Pacifica Capital Group was founded in 1982 by Steve Ohren and Steve Leonard. The company aggressively acquired and developed commercial real estate in Southern California for the next five years. This initial portfolio grew to just over 2 million square feet by 1987.

We eventually became concerned about the extreme optimism and the resultant overbuilding that was occurring throughout Southern California. This caused us to make the strategic decision to withdraw from the Southern California market in 1987. We sold most of our portfolio, at or near peak prices, and thus avoided the mistake committed by most of our competition of continuing to participate in an overheated market.

Pacifica then undertook a careful search to identify a new market where we could continue to purchase properties at a discount to their inherent value. We also required a market where the economic fundamentals were in an uptrend.

Our search ultimately led us to Denver in 1989. This market represented a compelling opportunity to acquire high quality properties at a fraction of replacement cost. These bargains were available, in large part, due to the extreme negative investor sentiment prevalent at that time. This was brought about by the rampant overbuilding in Denver that occurred in the early 1980's. We believed that this negative sentiment was unwarranted by 1989 given the fact that Denver was already experiencing a sharp rebound in job growth and an expanding economy. Furthermore, new inventory was absent due to extremely depressed rent levels.

This combination of growing demand and stagnant supply resulted in rising rents and falling vacancy rates. Not surprisingly, our portfolio of prudently leveraged properties produced exceptional investment returns commensurate with the portfolio's strongly rising cash flow.

After restructuring ownership of the Southern California and Denver operations in 1992, Pacifica Holding Company of Colorado established headquarters in Denver and later opened a second office in North Denver. From 1989 to 1997, Pacifica purchased over 100 properties valued in excess of $600 million. The properties included retail, industrial, office and office/showroom, totaling approximately 8 million square feet. Approximately one-fourth of this total consisted of development projects which Pacifica created. Pacifica Capital Group remained in Los Angeles during this period and kept Pacifica's presence in the region through third party property management and leasing (the principals also own a third party leasing firm - Leonard & Ohren).

Pacifica made the strategic decision to exit the Colorado market in 1997. We didn’t believe that prices were at their peak, however, we are generally quite willing to leave something on the table in order to avoid undue risk to our capital. Based on the overbuilding that was just beginning in Denver at that time, it seemed inevitable that there would be a sharp real estate correction as soon as the economy faced its next slowdown.

After patiently waiting on the sidelines in Southern California for seven years, there was finally evidence by 1996 that the regional economy had hit bottom and that the foundation for a sustainable recovery was being laid. Therefore, Pacifica Capital Group began once again aggressively making acquisitions in this marketplace in late 1996. We completed approximately fifty purchases from 1996 through 1998 valued at approximately $400 million.

Buyers began to reenter this market in full force by late 1998. Prices for most properties were once again bid up to levels which no longer represented true bargains. Obviously, if we try to buy the same properties that other people are buying, we are not likely to continue our superior record. Therefore, Pacifica decided it was time to sell the majority of the portfolio. We sold most of our industrial portfolio at a very sizeable profit in late 1999.

The bulk of our remaining California portfolio consisted of 17 office buildings. The majority of these buildings were purchased at depressed prices relative to their values in the late 1980’s. As a result of our relatively low basis the majority of the office investments have performed relatively well considering the economic recession of 2001-2002 and the impact of the dot-com implosion on office real estate in Los Angeles. As of mid-year 2003 we have disposed of the remainder of our industrial buildings and all but 5 of our office projects.