The Koll Co. has made its largest reported local purchase in several years, snapping up an office tower just over the Los Angeles County line in Cerritos.
The Irvine-based developer and investor partnered with Miami-based Rialto Capital to buy Cerritos Tower, a nine-story office near the intersection of the San Gabriel River (605) and Artesia (91) freeways.
The 184,179-square-foot building sold for $30.5 million, or about $165 per square foot, according to regulatory filings by Boston-based Winthrop Realty Trust, which sold the building.
The property is one of the highest-quality assets in the 6.2-million-square-foot Mid-Counties office market, which has had strong leasing activity over the past year, according to CBRE Group Inc., whose brokers worked on the deal.
Cerritos Tower was 74% leased at the time of the sale. Large tenants there include Sun West Mortgage Inc. and RevCycle Inc. The building brings in about $1.6 million in annual rents, according to marketing materials for the property.
Koll Co. Executive Vice President Scott Meserve said in a statement that his company was interested in the property “due to its prominent history in the market, the surrounding retail amenities, and its cost basis well below peak pricing and replacement cost.”
The building is within walking distance of the Best Plaza Shopping Center and Los Cerritos Center shopping mall, which like the office tower have been getting facelifts in the past few years.
Winthrop had put over $1 million of capital improvements into the property over the past 18 months, according to Paul Jones, first vice president for the Newport Beach office of CBRE.
“Koll and Rialto are planning to spend even more money on renovating the building to make it one of the premier office towers in the immediate area,” said Jones, who worked on the deal with colleagues Kevin Shannon, Ken White and Blake Bokosky.
The transaction is the largest single-building office sale in Cerritos in more than two years, according to CoStar records.
It is also one of two notable office sales in the city during the past two weeks, each involving an Orange County buyer.
Carmenita Corporate Plaza, a 70,000-square-foot building about three miles from Cerritos Tower, sold this month to a private Irvine-based investor for $19.7 million, according to CoStar data.
CBRE’s investment property group also helped broker that deal.
Recent Investment
The renovation planned for Cerritos Tower is similar to the one undertaken by Koll Co. in its last big reported area investment.
Koll Co. and Rialto Capital partnered to buy out of receivership a two-story office at 2929 Imperial Highway in Brea in late 2012 for about $10.8 million.
The office was about 50% leased at the time.
The investors upgraded the property and leased the building, which is now largely occupied by Zodiac Inflight Innovations, a maker of portable in-flight entertainment players and related software.
Palisades Capital Realty Advisors LLC, a commercial real estate investment management and advisory firm based in Los Angeles, bought the Brea building last year for a reported $20.8 million.
Koll Co. has been reported to have made only a few acquisitions in the past few years outside of the Brea and Cerritos deals.
Its biggest known deal over that time took place last year when it partnered with Rialto to pay about $48 million for Walnut Creek Executive Park, a 12-building business park in the East Bay of San Francisco.
Koll Co.’s namesake and founder, Donald Koll, died in 2011. The company was one of the country’s largest commercial developers under his watch, with more than 100 million square feet of office, industrial and retail space developed in the U.S. and Mexico.
The company’s chief executive now is Ray Wirta, chairman of CBRE and the former chief executive of the brokerage giant. He also serves as president of the investment properties group for Newport Beach-based Irvine Company.
