Harbor Associates LLC, a Long Beach-based real estate investor that does much of its work in Orange County, has made two of its largest deals in the region, buying properties in downtown Anaheim and Laguna Niguel for about $80 million combined.
Both properties, the Anaheim City Centre tower and Crown Cabot Financial Center, were acquired from Equity Office Management LLC.
The deal marks the latest sales for the Chicago-based office landlord, which has been shedding many of its local assets that it acquired at the start of this market cycle.
Of note, the latest sale took place about five months after Harbor brought on Rich McEvoy as a principal.
McEvoy previously ran the Orange County office portfolio of Equity Office, one of the country’s larger office owners. The firm’s local activity was profiled in last week’s print edition of the Business Journal.
“While both submarkets are very different, they each represent an opportunity to provide high-quality office environments where few opportunities for the same, currently exist,” McEvoy said.
Downtown Allure
Harbor paid $32.8 million, or about $168 per square foot, for Anaheim City Centre. The 195,000-square-foot tower at 222 S. Harbor Blvd. is one of just a handful of office towers near Anaheim’s City Hall.
The 10-story building is near the Anaheim Packing District, in a “fast-growing submarket of Anaheim,” according to Principal Paul Miszkowicz.
“The area is a great urban gentrification story, with new retail options springing up and making the downtown corridor a vibrant place to be,” Miszkowicz said.
The building was 83% leased at the time of sale to a mix of companies, including ground-floor tenant Wells Fargo Bank, engineering firm TTG Engineers, and the California Department of Rehabilitation.
CBRE Group Inc.’s Anthony DeLorenzo, Todd Tydlaska and Michael Longo brokered the deal on behalf of Harbor, which is planning light cosmetic renovations to the lobbies and corridors.
Equity was reported to have paid about $29.2 million for the building in 2015 when it was about 60% leased.
That deal was part of a larger 210-building portfolio buy from GE Capital, which also included the recently traded Crown Cabot office building in Laguna Niguel.
Price Drop
In the larger of the two acquisitions, Harbor paid nearly $47 million for the 173,000-square-foot Laguna Niguel building at 28202 Cabot Road. That’s less than the estimated $54 million that Equity paid for it four years ago, according to Costar Group Inc. records.
The new deal works out to about $271 per square foot for the office, which outside of the government-owned Ziggurat facility is the largest single office building in the city. It’s just off the (73) Toll Road near Crown Valley Parkway, and is visible from the San Diego (5) Freeway.
Newmark Knight Frank’s Kevin Shannon, Paul Jones and Blake Bokosky brokered the deal of the building, which was 87% leased to 26 different tenants at the time of sale.
“We liked the project because there isn’t a lot of new supply coming online in southern Orange County outside of the [Irvine] Spectrum and airport areas, and this is a great option for the nearby growing residential communities,” Miszkowicz said.
More to Come
This deal is the 25th office acquisition in the last five years for Harbor, which is backed financially in part by Bascom Group, an Irvine-based real estate investor best known for its large national apartment portfolio, but which also funds a number of additional investment, development and shared space businesses in the area.
Harbor recently freed up capital for the new OC acquisition by completing the sale of Create Tustin, a trio of offices near the Market Place shopping center that sold in separate deals earlier this year.
It sold the final building at the Tustin complex last month, bringing total sales for the 211,000-square-foot project to $72.8 million.
The company invests in value-add office projects, and now says its OC portfolio spans nearly 1 million square feet.
It said it has a goal of investing $250 million in Southern California office assets over the next year, including more deals locally.
Sales Push
This is the fourth reported local office sale this year for Equity Office, a unit of New York-based private equity giant Blackstone Group LP.
It sold One and Two MacArthur in May and June of this year in a series of transactions to a venture of New York-based private equity firm Angelo Gordon & Co. and Santa Monica-based Ocean West Capital Partners.
The two buildings in the South Coast Metro area of Santa Ana sold for about $137 million combined, marking a nearly 66% premium on what Equity Office paid in 2013.
The company is said to be shopping another notable local holding: The Landing, a 237,000-square-foot office project on Red Hill Avenue in Costa Mesa. It paid $50.5 million for the three-building complex in 2014, or about $220 per square foot.
