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Orange County saw more than its share of distressed commercial real estate properties trade hands in 2009 compared to other large markets. But the area could see a more proportional amount of deal-making this year.
OC is ranked 35th overall among U.S. markets for the percentage of distressed commercial properties, according to a December report from New York-based Real Capital Analytics.
The report lists OC as having 95 midsize to large troubled commercial assets—including properties in foreclosure, bankruptcy, or in modified or restructured status—which are valued at about $2.8 billion.
In comparison, Los Angeles has $7.1 billion of troubled assets, while the Inland Empire has $2.2 billion and San Diego has $1.7 billion of troubled assets, according to the Real Capital report.
OC ranks No. 4 among Western markets in terms of total dollar value of distressed assets.
Las Vegas is No. 1 in the West and in the U.S., with $17.7 billion of troubled assets.
Even though OC had a comparable amount of distressed properties last year, compared to other markets, bank-driven sales here far outpaced much of the country.
Among large office property sales in 2009, deals in OC made up nearly 30% of all the buildings that sold between Seattle and San Diego, according to investment brokers.
That was driven in part by sales of several local buildings once owned by Los Angeles-based Maguire Properties Inc., as well as the former Newport Beach headquarters of Downey Financial Corp., which was the largest office building in the U.S. auctioned off by the Federal Deposit Insurance Corp. last year.
Through November, OC saw $1.6 billion of commercial property sales in 2009, including $789 million worth of office sales, $361 million of apartment complexes, $250 million of industrial buildings and $185 million of retail properties, according to Real Capital’s figures.
Steve Bren’s Home Sale
Irvine-based Bacchus Development and its owner, Steve Bren, appear to have figured out one way to pay off some of the more than $70 million it owes to San Francisco-based Union Bank NA and other creditors: the potential sale of a pricey beachfront home in Malibu.
The sale of a nearly 4,000-square-foot home on Pacific Coast Highway is one way the company hopes to pay off creditors, according to recently filed documents made in Santa Ana’s bankruptcy court.
Bacchus filed for Chapter 11 bankruptcy protection in September, after falling behind on payments to Union Bank for nearly $55 million in loans. It’s one of the larger local commercial real estate developers to file for bankruptcy during the downturn.
The company, which built for-sale condominiums in several Irvine Spectrum projects, is aiming to exit bankruptcy by March, according to court filings. An amended plan of reorganization was filed with the court in mid-December.
Sales of some of Bacchus’ offices have been ongoing during the past few months. Recent deals include the $2.1 million sale of a building on Scientific Way to Spectrum eCommerce Solutions, according to court records. The Irvine-based buyer, which closed on the building in late December, had been leasing the building.
The most expensive individual sale proposed in the reorganization isn’t for an office, but rather the 1.6-acre Malibu home that Steven Bren—son of Irvine Company Chairman Donald Bren—owns through his Bacchus Investment Group LLC.
The four-bedroom property was bought in 2007 for $12.7 million, according to Realtor records. Now, the property’s listed for sale at $16.5 million, down from its original asking price of $20 million.
First Republic Bank, the lender for the home, has filed a notice of default on the home and has been pushing for a foreclosure. But Bacchus would prefer to run its own auction and thinks it can get a better price for the home. The company would like the auction to take place early this month, according to court records.
Steven Bren also owns a home lot in Laguna Beach’s Emerald Bay that’s listed as being up for sale at about $8.5 million, but it does not appear to be tied to the bankruptcy proceedings.
The construction at the Emerald Bay site has been halted for much of the past year.
