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Batch of Blockbusters

There was no shortage of blockbuster property sales in Orange County last year.

The largest individual sales last year in each of the area’s six largest commercial real estate property types—office, industrial, retail, apartment, land and hotels—combined for about $1.2 billion last year, according to brokerage data and Business Journal records.

And that tally doesn’t even include the $57.5 million paid last year for OC’s most prominent church property: the Crystal Cathedral in Garden Grove, which saw a bankruptcy-driven deal grab headlines around the world.

The $1.2 billion total is an impressive haul for a local real estate industry that in many cases is still finding its feet after the last downturn.

The highest-priced sales in those same six categories totaled about $400 million in 2011.

Quality, size, and age of the individual properties that traded hands last year accounted for much of the $800 million increase last year. Another assist came from the generally improving real estate market.

Among 2012’s highlights were:

• The 1,572-room Anaheim Hilton trading hands for a reported $216 million last summer, giving the buyers Orange County’s largest hotel by room count.

The prior year’s largest hotel deal was for the 255-room Holiday Inn Hotel and Suites in Anaheim, which sold for about $26 million.

• The 536,000-square-foot Michelson office tower in Irvine selling in August for $277 million. That’s $169 million and about 200,000 square feet more than the top individual office sale of 2011, the $108 million deal for 2050 Main Street, another office in Irvine.

The new owners of the Anaheim Hilton and Michelson office tower represent a new type of buyer in OC of late: deep pocketed out-of-country investors willing to pay top dollar for the area’s better properties.

Toronto-based Manulife Financial Corp., best known in the U.S. for its John Hancock Life Insurance Co. division, paid more than $500 a square foot for the Michelson tower, setting several local marks for an office sale.

Records on the low-key Anaheim Hilton sale show the buyer having ties to the Abu Dhabi Investment Authority, or Adia, which invests funds on behalf of the Emirate of Abu Dhabi.

Adia was estimated to be the largest sovereign wealth fund in the world as of 2010, with estimated assets of more than $600 billion.

Familiar Names

A few more familiar names were involved in other chart-topping deals made here last year.

Schottenstein Property Group Inc., a Columbus, Ohio-based shopping center owner that already counted several local properties in its portfolio, made the largest local retail purchase of 2012, paying $122 million for The Orchard shopping center in Lake Forest.

The 13-building, nearly 281,000-square-foot property was built for an estimated $80 million by Los Angeles-based developer Westrust Inc. The Orchard opened up in multiple phases amid the last recession.

Last June, Horsham, Pa.-based Toll Brothers Inc., one of the country’s better-known home builders, finalized its purchase of a 50% interest in Baker Ranch, a 387-acre masterplanned community in Lake Forest that’s expected to hold 1,780 homes and 414 apartments.

Executives at Toll Brothers said in August that they paid about $110 million for the land—believed to be OC’s largest land deal of 2012—which they are developing in partnership with Walnut-based Shea Homes.

The largest local industrial sale of 2012 was a deal for a portfolio that involved two buyers, one local and one based in New York.

Los Angeles-based Kilroy Realty Corp. sold off its entire industrial portfolio, an OC-centric batch of local buildings, along with two nonlocal offices, totaling about 3.7 million square feet.

The buildings sold in two separate deals for a combined $355 million, and they were bought by New York-based pension fund TIAA-CREF and LBA Realty in Irvine.

The specific price paid by each buyer was not disclosed by Kilroy, which said it expected to see a $185 million gain on the sale, which closed at the end of 2012.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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