Bill Halford is back in the office game.
Technically, he never left. But his latest plan to buy $345 million worth of Orange County office buildings is a coup for the chief executive of Bixby Land Co.
Halford said last week that Newport Beach-based Bixby plans to buy 11 local office properties from Maguire Properties Inc. It’s Bixby’s largest buy yet.
The offices, totaling about 816,000 square feet at five sites, were among the 3 million square feet of OC space put back on the market by Los Angeles-based Maguire following its February buy of Equity Office Properties Trust’s local buildings. The deal’s expected to close by summer.
It’s a return to what Halford, the former head of The Irvine Company’s office division, knows best. Bixby, a real estate developer and investor, had been focusing on industrial deals since Halford took the company’s reins about a year ago.
Bixby now has a portfolio of about 5 million square feet and more than 60 properties. After years of minimal investment activity, the privately held real estate investment trust has nearly doubled its portfolio size in the past year, observers said.
The company is “back in the office game, but we’re still in the industrial game, too,” Halford said.
The company’s industrial portfolio, including recent buys in Silicon Valley, Phoenix and the Inland Empire, is seen as a more long-term investment, while the offices are more of a “cycle play,” with a bet on rising rents and property values in a constrained local market, according to Halford.
The offices bought from Maguire,mid- and low-rise buildings in Newport Beach, Irvine and Seal Beach,went for about $410 per square foot.
Rents Too Low
The buildings include Redstone Plaza and 1201 Dove St., both in Newport Beach, and Fairchild Corporate Center in Irvine. The new landlord says rents at the buildings are below current rates. None of the buildings being traded have any subprime mortgage tenants.
The sale makes Bixby the fourth owner of the buildings this year. It was a “time-crunch deal, especially because of its size,” Halford said.
Private equity firm Blackstone Group LP bought Equity Office’s national portfolio in February, and immediately sold off the OC holdings to Los Angeles-based Maguire.
“Prior to Blackstone, no one had really seen this (type of transaction),” he said. “It really shows that the public markets were ineffective at pricing real estate.”
Halford is friends with Maguire Chief Executive Robert Maguire.
“As soon as I knew Rob had won the bid with Blackstone, we sat down, and assembled a portfolio of properties we liked,” Halford said. “Rob is really a high-rise, (central business district) guy by heart, and those buildings weren’t really in core markets. But we like where they sit.”
“Bill knows the market as well as anyone,” said Barry Katz, managing director of CB Richard Ellis Group Inc.’s office specialty group in Newport Beach. “He’s not buying the high-rise, glamour offices. These are multitenant properties, which he likes.”
Also included in the Maguire-Bixby deal is Irvine’s Inwood Park, at the corner of McGaw and Redhill avenues. Along with the existing 157,000 square feet of space at the site, the property includes entitled land that could support an additional four-story office.
“The Irvine Co. is building a number of these types of buildings (nearby),” he said. “Demand for low-rise space remains strong.”
Portfolio Growth
Bixby Land has been using joint ventures and debt to help the company’s portfolio grow. The Maguire buy was funded through a venture with Baltimore-based Mercantile Real Estate Advisors Inc.
“It’s less an economic capacity and more a manpower capacity (that could hinder growth). You need the time to execute,” Halford said.
