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Tuesday, Mar 19, 2024
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Deal Expected for Central OC Tower

The City Plaza tower in Orange is up for sale, and a Newport Beach-based real estate investor is said to be part of the group expected to buy the 19-story office.

The 334,000-square-foot building—which fronts the Garden Grove (22) Freeway next to the Outlets at Orange shopping center—is in the process of being sold, according to documents sent to tenants at the office last week.

An expected price for City Plaza, one of the larger and most prominent offices in Central Orange County, has not been disclosed.

A deal in the $75 million range—about $225 per square foot—or higher would appear likely, based on other recent Orange County office sales of largely full buildings.

The building’s current owner, Los Angeles-based Hudson Pacific Properties Inc., paid close to $50 million for the then-financially distressed property in 2008; it had been valued at more than $100 million a few years earlier.

Bixby Office Park

The priciest office sale in OC so far this year was the $85 million sale of Seal Beach’s Bixby Office Park, a three-building complex just off the San Diego (405) Freeway and next to Seal Beach Boulevard.

Parallel Capital Partners Inc., a San Diego-based commercial property investor, last month said it paid about $286 per square foot for the 297,241-square-foot complex, which is said to be 98% leased.

Hudson Pacific bought the City Plaza tower at 1 City Blvd. W. when it was about 45% full.

Regulatory filings show the company has spent about $6 million on improvements to the property. It is now about 85% occupied and counts Anaheim-based mortgage and consumer lender CashCall Inc. as its largest tenant.

Hudson Pacific executives said earlier this month in a call with analysts that they had seen “very good interest” in City Plaza—its only office in OC—from prospective buyers.

CashCall Lease

CashCall signed a 125,208-square-foot lease at the building last year in one of the county’s largest office leases of 2012. The fast-growing company is said to be considering expanding further there, and CashCall has its name atop the building.

Tenants of the building last week said they were expecting to meet with the prospective new owner in a matter of days; two of the tenants said they were told that Newport Beach-based Greenlaw Partners LLC was buying the office.

The privately held real estate investor and developer could not be reached for comment last week.

Greenlaw and its investment partners currently own office properties in Orange and Anaheim that total about a half million square feet of space.

Nearby properties in Greenlaw’s portfolio include the 4000 Metropolitan office that’s down the street from City Plaza.

4000 Metropolitan is about 183,000 square feet. Greenlaw paid a little less than $12 million in 2010 for the building, which was largely empty at the time. It subsequently added several large tenants, including the FBI.

Crystal Cathedral

Greenlaw also made a $46 million bid in 2011 for the nearby Crystal Cathedral and its surrounding campus in Garden Grove following the bankruptcy of the ministry that owned the property. Greenlaw’s bid came with an eye to develop apartments on part of the campus.

A bankruptcy judge ultimately approved a $57.5 million offer for the cathedral and its campus—which is near City Plaza—by the Roman Catholic Diocese of Orange County.

Greenlaw has worked with financial backers, including Westbrook Partners LLC in New York and Chicago-based Walton Street Capital LLC, for other recent area acquisitions. It’s not known whether those groups would be part of a deal for City Plaza.

City Plaza brings in about $6.7 million in rents annually, according to Hudson Pacific’s latest annual report, filed this month with the Securities and Exchange Commission.

Monthly rents at the building average about $2 per square foot.

Tenants besides CashCall include two of the largest law firms in the city of Orange—Walsworth Franklin Bevins & McCall LLP and Brady, Vorwerck, Ryder & Caspino.

Litigation

Brady, Vorwerck—which counts about 27 local lawyers and 60 total employees—is currently in litigation with Hudson Pacific over the status of its 10-year lease at City Plaza.

The law firm alleges that the safety of its employees and clients is at risk due to questionable behavior by other tenants—believed to be CashCall employees—at the building and says the landlord has not done enough to improve security at the office.

Representatives of Hudson Pacific allege the law firm is using CashCall as a scapegoat to get out of its lease.

Michael Caspino, a partner at Brady, Vorwerck since its inception in 1996, said his firm intends to leave City Plaza, regardless of a change in ownership and is focusing on a few locations close to John Wayne Airport.

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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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