COMMERCIAL
Newport Beach developer and real estate investor Centurion Partners got an assist from Magic Johnson in completing its first acquisition in Texas.
Centurion teamed up with Canyon-Johnson Urban Funds, a private real estate investor in Beverly Hills—where basketball legend Johnson is a partner—to buy Hotel Icon, a trendy boutique hotel in Houston.
The 12-story hotel, which has 135 rooms, was bought out of foreclosure early this month. It had been owned by Los Angeles-based Lowe Enterprises Investors, according to reports.
Centurion and Canyon-Johnson paid $27 million to buy senior and junior loans tied to the hotel, and closed on the property on Jan. 4. Hotel Icon went into foreclosure carrying $46 million in debt, according to reports.
It’s the first deal in Texas for Centurion, which has focused on hotel and condominium developments in San Diego and Aspen, Colo., as well as a mixed-use project in Miami.
It’s also the first deal Centurion’s done with Canyon-Johnson, according to Scot Matteson, cofounding partner at the developer. The two are looking at another half a dozen or so distressed hotels across the country, he said.
Centurion’s also looking at buying a few properties in Europe, Matteson said.
The Houston hotel’s new owners plan to make some cosmetic changes to the building, a former bank that was built in 1911 and converted into a hotel in 2004.
They’re also in talks with several national and international hotel chains, and expect to rebrand the hotel in the next six months.
Office Trades
A pair of office complexes in Tustin and Lake Forest are among a dozen West Coast properties trading hands in a $306 million portfolio sale.
San Diego-based Pacific Office Properties Trust Inc., a real estate investment trust that kicked off operations in 2008, recently disclosed it has reached an agreement to buy the office portfolio, totaling about 1.9 million square feet, from affiliates of Boston’s Guggenheim Real Estate.
The properties trading hands total 31 buildings in all, which are about 74% leased on average. The bulk of those buildings are in Los Angeles and San Diego. The deal also includes two local properties, which have a total of four fully leased buildings.
They include Foothill Building in Lake Forest, a three-office complex that totals about 153,000 square feet. The complex is leased to Britain’s Invensys PLC, an engineering software company.
Invensys pays about $2.6 million in annual rent for the space and has a lease running through 2019, according to regulatory filings.
Also trading hands is an 118,000-square-foot office in Tustin that’s leased to Toshiba America Medical Systems Inc., a maker of medical imaging equipment. The tenant, a unit of Japan’s Toshiba Corp., pays about $1.8 million in annual rent in a deal that runs through 2016.
The local buys are the first here for Pacific Office Properties Trust in a few years. The fund, which until last year was based in Santa Monica, was spun off from Shidler Group, a Honolulu-based commercial real estate owner.
Pacific Office and its affiliates took over much of Shidler’s Western U.S. office portfolio in the 2008 spinoff, including 10 OC buildings totaling nearly 600,000 square feet that were once owned by Los Angeles’ Arden Realty Inc.
Blending Boom
Early renewals of existing leases, at rates beneficial to tenants, have been driving a good deal of the deals in the industrial market, according to one busy brokerage team.
“‘Blend and extend’ continues to be a prevalent trend in the market today, and we expect this to continue well into 2011,” said Dave Desper, senior vice president at the Newport Beach office of CB Richard Ellis Group Inc.
“Landlords remain focused on maintaining occupancy and avoiding down time in their buildings, and tenants remain focused on lowering occupancy costs both in the short and long term,” said Desper, whose team, which includes Senior Vice President Chip Wright, has been involved in about 300,000 square feet of leases during the past month.
Among renewals, the team represented Santa Ana-based Melmarc Products Inc., one of the county’s larger apparel companies, in an early blend and extend deal for distribution space it has in Huntington Beach.
Melmarc renewed 50,987 square feet at 16350 Gothard St. for more than four years, a deal valued at $1.2 million. That works out to monthly rates of about 44 cents per square foot.
The team also helped Goodwill Industries sign a new 61,731-square-foot lease at 3232 Fairview in Santa Ana for 10-plus years. That $4.5 million deal translates to monthly rates of about 59 cents per square foot.
The overall industrial leasing market is not back to peak activity levels, but “we are seeing the laws of supply and demand at work for quality buildings, which is pushing lease rates up on an asset by asset basis,” Desper said.
