Four of Central Orange County’s better-known office buildings are on the sales block and could sell for nearly $275 million on a combined basis.
Brokers with the local office of CBRE Group Inc. recently began marketing the offices—one in Anaheim and three in Orange.
The four—City Tower, 500 Orange Tower, Stadium Towers and 3800 Chapman—had all been burdened with financial constraints under prior ownership, leaving most of them with larger-than-normal vacancies and a designation among area tenant and leasing brokers as “zombie buildings” in recent years.
The buildings combine for a little more than 1.1 million square feet, and they are being sold in separate offerings by two of the country’s largest special servicers for distressed properties—Bethesda, Md.-based CWCapital Asset Management LLC and New York-based Torchlight Investors.
A time frame for expected completion dates on the sales hasn’t been disclosed.
Bids
Initial bids for the largest of the four buildings, the 21-story City Tower in Orange, are expected by the end of the month.
Bids for the other three buildings are due in mid-November, according to CBRE marketing materials.
Officials with the brokerage declined to comment on the sales.
Each building was previously owned by Los Angeles-based MPG Office Trust Inc., which was Orange County’s second-largest office landlord at the peak of the last real estate cycle.
MPG, previously known as Maguire Properties Inc., picked up the buildings in 2007 as part of its $2.9 billion buy of OC and L.A. offices from Equity Office Properties Trust (see related story, page 3).
The four offices represent the last significant set of local properties still feeling the effects of that ill-fated deal, made just prior to the last recession.
The buildings had close to $400 million in debt tied to them at the time Maguire bought them. Each eventually fell behind on their debt payments in the economic downturn and softening local office market, placing them in a multiyear state of limbo as their ownership and financing issues were being sorted out.
The three towers that are being sold are reported to have availability rates of between 23% and 60%, well above the 17% average for Orange County’s office market as a whole.
Torchlight took over ownership of City Tower in 2011, and CWCapital took over ownership of the other three buildings in 2012.
CWCapital’s sale is part of a larger, national portfolio of real estate properties and loans valued at about $2.6 billion. CBRE is marketing the deal in conjunction with Irvine-based Auction.com.
The assets include more than 2,100 hotel rooms, about 3.2 million square feet of retail properties and almost 9 million square feet of offices.
The sale is structured so that prospective purchasers have the opportunity to submit offers on individual pools, groups of pools, single assets or for the portfolio in its entirety, according to CWCapital.
Properties
The local buildings being sold by CWCapital include the 12-story Stadium Towers, a 262,360-square-foot office at 2400 E. Katella Ave. next to Angel Stadium; and 500 Orange Tower, a 14-story, 280,340-square-foot building in Orange on North State College Boulevard.
Also for sale is 3800 Chapman, an eight-story, 172,000-square-foot office in Orange. That building has by far the highest occupancy rate of the four local buildings being sold—nearly 97%, according to recent data.
The unpaid debt tied to those three buildings totaled nearly $250 million at the time MPG turned over ownership to CWCapital.
Torchlight’s sale of City Tower involves a $115 million nonperforming loan tied to the office, which runs about 413,000 square feet and is Central OC’s largest office tower.
The building’s replacement value is about $175 million, according to CBRE’s marketing materials for the property, which had a total of $140 million of debt tied to it when MPG gave the property back to Torchlight.
