COMMERCIAL
Values are sinking on more than just Orange County homes.
In the Sept. 8 issue of the Business Journal, I wrote a story about Los Angeles-based Maguire Properties Inc. selling the City Plaza tower in Orange to Los Angeles’ Hudson Capital LLC for a loss. At the time, I didn’t know how much of a deal Hudson Capital got.
Hudson was founded last year by Victor Coleman, the former head of office landlord Arden Realty Inc. City Plaza is the company’s first OC acquisition.
Specifics of the deal, which was initiated by the building’s lender, weren’t disclosed at the time of the sale. But it was clear Maguire was selling the City Plaza at a much lower price than it had valued the property in early 2007.
City Plaza, a 327,000-square-foot, 18-story building, had a $101 million loan on it at the end of June. Maguire said it was taking up to a $22 million charge on the City Plaza sale, based on the cost of holding the building. I estimated the sale to be close to $100 million in the story.
That estimate appears to be way off the mark. Sources involved in the deal now say Hudson paid less that $55 million to acquire the loan on City Plaza. That would put the price on the building,one of Central County’s most prominent offices,at $168 per square foot.
In comparison, Orange City Square, a four-building office and retail complex off the Garden Grove (22) Freeway, traded hands a year ago for about $335 per square foot, while Orange’s Union Bank Square sold for about $230 per square foot in July 2007.
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City Plaza: new sources say building sold for $168 per square foot |
Irvine Co. Hire
Newport Beach’s Irvine Company hasn’t bought any of Maguire’s local offices that have been put back on the market, but the county’s largest landlord has added some of the Los Angeles-based real estate investment trust’s brains to its own management team.
The latest addition is William Flaherty, who had headed up Maguire’s OC operations in the past two years. He’s joining the Irvine Co.’s investment property group,which runs the company’s office, apartments and retail properties,as a senior vice president of marketing.
Richard Gilchrist, the president of the investment properties group, previously was co-chief executive of Maguire.
Thompson Advises on Sale
In August, the Los Angeles Times first reported that Irvine-based Thompson National Properties LLC was buying 1.4 million square feet of industrial properties from Storm Properties Inc. of Torrance, part of Storm Industries Inc., for a reported $110 million.
Officials at Thompson National,the venture started by former Grubb & Ellis Co. chairman Tony Thompson,told the Business Journal at the time that the sale hadn’t closed, and that details of the transaction were different from what was being reported.
It turns out that a lot of those details were off-base. The real estate arm of Boston-based private equity firm TA Associates Inc., not Thompson National, ended up buying 545,000 square feet of Storm’s portfolio,primarily in Torrance,for more than $52 million.
While not buying the properties, Thompson National said it received a commission and advisory fee for facilitating the sale. Kevin Shannon, from the Torrance office of CB Richard Ellis Group Inc. introduced TA Associates to Thompson National.
RESIDENTIAL
Also in August, I wrote a column item about Santa Ana-based First American Corp. missing out on an opportunity to acquire one of the largest title operations in Colorado: Denver-based Mercury Cos.
Instead, First American saw its largest rival, Jacksonville, Fla.-based Fidelity National Financial Inc., swoop in with a $5 million bid for four title companies in Colorado owned by Mercury, which had a long business relationship with First American.
Fidelity officials said the acquisition meant that their company would lead the market in the Rocky Mountain state. Mercury’s four Colorado businesses account for about 30% of the title business in the state.
First American has not ceded the Colorado market, however. It an-nounced this month that it is opening direct operations in the state.
Lynn Donner will be heading up the Colorado operations for the company. She had been serving as regional vice president for First American’s Nevada operations.
First American’s decision to open direct operations doesn’t mean its dealings with Fidelity and Mercury are resolved. It unsuccessfully tried to block the sale in U.S. District Court, but could still file a lawsuit to undo the sale or recover damages from Mercury and Fidelity, according to local reports.
First American last valued its investment in Mercury at about $37 million.
