Wells Fargo might not have its logo atop the newest office building on Newport Center Drive, but its name is on something just as important for the building: loan documents.
Irvine Company recently completed a $250 million financing deal that covers the speculative 21-story development at 520 Newport Center Drive, as well as two adjacent nine-story offices.
Loan documents show that the Irvine office of Wells Fargo’s commercial real estate division provided the loan, the latest major financing deal that has come to light in the past year and a half for Irvine Co.
New office loans typically aren’t news, but they are closely watched when they involve Newport Beach-based Irvine Co., the largest office owner in the state. It also is the largest landlord in Orange County and owns properties in Los Angeles, San Diego and Silicon Valley.
The privately held real estate investor and developer is believed to have one of the lowest debt loads of any major real estate company in the country despite a commercial real estate portfolio that is now approaching 100 million square feet.
Sources peg Irvine Co.’s debt level at about 40% or less of the company’s entire portfolio, on the low side for the industry. It also has an “A” credit rating and stable outlook from Fitch Ratings Inc., so when the company does borrow, it is able to do so at rock-bottom rates.
That company’s debt level appears to be inching up of late. The company is known to have placed more than $1.6 billion of debt on new and existing office properties in its portfolio since mid-2013.
Other major financing deals that Irvine Co. is known to have completed since May 2013 include an $875 million commercial mortgage loan package tied to 4.8 million square feet of office space it owns in Orange and Los Angeles counties.
Most of those properties were debt-free prior to the CMBS deal, according to real estate sources.
Irvine Co. also lined up a $475 million loan to help fund the acquisition of 300 N. LaSalle, a 60-story skyscraper in Chicago that it bought earlier this year for $850 million.
The company has also placed several hundred million dollars’ worth of mortgages for new and existing apartment complexes it owns in the area, and sources tell the Business Journal that the company’s retail division has also been active in lining up debt for some of its properties.
Real estate sources familiar with Irvine Co.’s operations said the developer could be planning to use some of the funds from its latest deals to finance other developments and investments, in addition to merely taking advantage of a beneficial financing environment.
Irvine Co. officials declined to comment on the latest financing deal for its offices on the 500 block of Newport Center Drive, which includes the company’s headquarters.
Pricey Loan
Terms of the $250 million loan made with Wells Fargo are not known, but the deal appears to have a much higher loan-to-appraised value than other deals that have been previously reported.
The three buildings, which total about 608,000 square feet, now have close to $410 of debt per square foot attached to them.
A sale of the properties at a similar per-square-foot price would be among the most expensive on record for larger office properties in Orange County.
The two nine story offices involved in the deal, at 500 and 550 Newport Center Drive, are nearly full. Neither is known to have had debt tied to it prior to the deal.
The 331,000-square-foot tower at 520 Newport Center Drive opened last month and is in the process of getting leased up. Full-floor tenants include Acacia Research Corp. and Stifel, Nicolaus & Co., while Janus Capital Group Inc. is leasing a small amount of space on one of the building’s lower floors. n
