The 4000 MacArthur office complex in Newport Beach has traded hands for more than $100 million, just weeks after the two-building property landed one of the largest tenants on the market.
A venture between Houston-based real estate investor Hines Interests LP and Oaktree Capital Management LP in Los Angeles recently closed on 4000 MacArthur, home to a pair of 10-story buildings near MacArthur Boulevard and Jamboree Road and close to John Wayne Airport.
The campus, part of the 179-acre Koll Center Newport business park, is considered one of the most prominent office properties in Newport Beach outside of Newport Center.
Terms of the sale were not immediately disclosed. Other high-end office towers in the airport area in Irvine have traded for about $345 per square foot in recent months. That would put a valuation of more than $130 million on 4000 MacArthur, which has about 375,000 square feet of leasable space.
The Newport Beach address for 4000 MacArthur could have bumped up that price by several million dollars, according to real estate sources.
Emmes Group of Cos. sold the property. The New York-based real estate investor took over ownership of the complex in 2011 in a deal valued at $94 million and has spent the past few years renovating it.
Hyundai Capital
Emmes’ last act at the property was a large one: Late last month, it landed Irvine-based Hyundai Capital America Inc. as a tenant for the entire west tower at the campus.
The 178,000-square-foot deal is one of the largest local office leases of the past year and will result in the automobile finance arm of South Korea-based Hyundai Motor Group consolidating a large portion of its sizable local operations at the complex.
The Hyundai Capital deal boosted the occupancy rate at 4000 MacArthur to about 91%, according to Hines officials.
The top floor of the east tower is available for lease, as is another floor in the same building that’s been redesigned to attract creative-office tenants.
4000 MacArthur’s “location, access, visibility, quality improvements, and credit tenancy make this a particularly attractive acquisition for Hines and Oaktree,” said Hines Managing Director Ray Lawler, who leads the firm’s Orange County development and investment office.
It’s the first Newport Beach investment for Hines, whose national office portfolio gravitates toward skyscrapers and other trophy properties.
The company has pursued a different strategy in OC to compete in a local office market dominated by Newport Beach-based Irvine Company, which owns much of the best high-rise space in the airport area, Newport Center and the Irvine Spectrum.
Hines has purchased a number of low- and midrise office complexes over the past few years, including properties in Irvine, Brea, Yorba Linda and Santa Ana.
The company had wanted to acquire an OC building of 4000 MacArthur’s prominence for some time but hadn’t come across many opportunities, Lawler said.
The bulk of Hines’ local purchases has been in partnership with Oaktree, a global investment manager with more than $90 billion in assets under management at the end of last year.
“4000 MacArthur is our 11th project with the Hines Orange County team,” said Oaktree Managing Director Ambrose Fisher. “We now own 2.8 million square feet in Orange County that we have taken from 65% leased at acquisition to nearly 90% leased today.”
More Change
The 4000 MacArthur sale and the addition of Hyundai Capital as its main tenant adds another chapter to the history of the office complex, which has seen its share of occupant and ownership changes over the past decade.
The buildings long held the headquarters of two of OC’s best-known chipmakers, Conexant Systems Inc. and spinoff Mindspeed Technologies Inc.
Conexant, a onetime owner of the complex and of land next to the property where a large residential development is under way, moved from 4000 MacArthur to a smaller location in Irvine following its 2013 bankruptcy.
Mindspeed, acquired by Lowell, Mass.-based M/A-COM Technology Solutions in 2013, still leases about 60,000 square feet in the east tower of the complex but has been slimming down its space in recent years.
The company at one time had as much as 107,000 square feet at the complex, which had served as its headquarters since its founding.
Conexant previously owned both buildings, but in 2005 the chipmaker signed a sale-leaseback deal with Newport Beach-based KBS Realty Advisors, which paid $110 million for the property.
New York-based Tishman Speyer Properties LP paid KBS just under $134 million, or $365 per square foot, for the towers in 2006.
In 2011, Emmes reportedly bought a $40 million junior portion of a $100 million mortgage tied to the property for 80 cents on the dollar and moved to foreclose on it from Tishman. It took over the property later that year in a deal valued at about $94 million, or about $249 per square foot.
Emmes has since put several million dollars into the property’s interior and exterior areas, including new lobbies, landscaping, outdoor seating areas, and an on-site cafe.
