Government consulting agency HdL Cos. is prepping for future growth through the acquisition of a sizeable office building that houses its headquarters in Brea.
The company, which provides a variety of auditing, operations, and revenue-related services for public agencies, paid $23 million for the 80,000-square-foot multitenant office building at 120 S. State College Blvd.
The three-story property sits just west of the Orange (57) freeway, and is part of the six-building Brea Place collection of offices to the north of the city’s mall.
The just-completed deal works out to about $290 per square foot. By price, it’s the largest single-building office sale in Brea in a little more than a year, according to records from real estate market tracker CoStar Group Inc.
“This wasn’t an investment as much as planting a flag and setting ourselves up for future growth,” HdL Chief Financial Officer Jeffrey Schmehr told the Business Journal.
“We occupy about a quarter of the building, and if we need to expand then we have room to do that.”
HdL has nearly 60 employees at the property; other tenants in the building include CareFusion, the County of Orange, TT Electronics and Veolia Water Technologies.
HdL President and Chief Executive Andy Nickerson said the purchase “was a great opportunity for HdL to secure our headquarters in the city of Brea.”
The buyer employs about 150 people in total, and has been on a growth spurt of late.
Around the start of the year, it bought Colorado’s PREMA Corp., which provides tax administration, business license compliance/administration, and auditing services to government agencies in its home state, Alabama and Georgia.
Some more deals closer to home are possible, according to Schmehr.
The employee-owned firm, which began its transition into an employee stock ownership plan in 2007, is looking to buy two sister companies.
It expects to complete the first acquisition, of HdL Software LLC—a 23-person firm still owned by the original founders—in the next two to three months.
HdL Cos. also plans to buy another related company, a separate employee-owned firm with about 12 employees.
“Our plans are all about continuing our growth trajectory, expanding our service to new clients and bringing on more employees,” said Schmehr.
The company said it works with some 500 government agencies in 11 states, and has helped them recover more than $2 billion in revenue.
It provides consulting services related to economic development, lodging taxes, business licensing taxes, and property taxes.
A growing line of business for HdL is providing advice on municipal ordinances, application reviews and fiscal analysis related to cannabis licensing at the city and state level.
Hines Sale
The Brea Place office was sold by Houston-based Hines, which bought the building in 2014 as part of its $70.6 million acquisition of the entire six-building Brea Place office park.
The investor and developer, whose local offices are in Newport Beach, bought the complex in a partnership with Los Angeles-based private equity firm Oaktree Capital Management.
HdL has been looking to take ownership of its building since it moved in about seven years ago, Schmehr said, though it hasn’t been available until now.
“We believe [Hines] felt the timing was right to put this building” on the market, Schmehr said. The other five offices at Brea Place are reported to be up for sale separately.
Drew Sanden, senior managing director of Newmark Knight Frank, brokered the deal between HdL and Hines.
Additional tenants at other buildings at Brea Place include Manufacturers Bank, Becton Dickinson, and CoolSys, which in March got a new private equity owner, L.A.-based Ares Management.
Brea Place counts close to 560,000 square feet of office space, and will be getting an apartment complex built on a portion of its campus that previously held excess parking.
Hines’ purchase five years ago included roughly 10 acres of land slated for mixed-use development. Last July, AvalonBay Communities Inc. struck a deal with Hines to build 653 units on that land.
The Arlington, Va.-based apartment owner paid about $25 million to buy out the stake of Oaktree Capital Management in the proposed development, according to CoStar Group Inc. records.
Hines has retained an ownership stake in the 529,000-square-foot multifamily project.
