Chicago-based Equity Office Management LLC is nearing its third large local investment of the year, this time for a two-building office complex in Santa Ana, according to real estate watchers.
The office investor, a unit of New York-based private equity giant Blackstone Group LP, is said to be close to completing the purchase of what’s known as the Twin Towers offices at MacArthur Place.
The two nine-story buildings, at 1 and 2 MacArthur Place in the South Coast Metro section area, total about 421,000 square feet and are currently owned by GLL Real Estate Partners, a Germany-based investor.
Equity Office is expected to pay more than $225 per square foot for the buildings, according to multiple real estate sources familiar with the deal.
That would equate to nearly $100 million for the buildings, which sit near the junction of the Costa Mesa (55) and San Diego (405) freeways next to the headquarters of Santa Ana-based First American Financial Corp.
The deal would continue a trend of large area office purchases in the second half of the year by some of the larger institutional investors in the country.
A deal would also add to a string of local purchases for Equity Office, Orange County’s second-largest office landlord before cashing out on its local portfolio near the peak of the last commercial real estate cycle.
The portfolio, assuming the MacArthur Place purchase goes through, would approach 1.5 million square feet, after the company spends more than $280 million this year on area acquisitions.
In late October, it bought the South Coast Corporate Center, a three-building office complex near South Coast Plaza in Costa Mesa. That deal was valued at nearly $75 million.
Equity Office also paid about $105 million in June for a four-property office portfolio in Irvine and Newport Beach whose buildings total about 521,000 square feet.
Seller
The company has also been an opportunistic seller of properties it’s picked up over the past few years. Late last month, it sold Centerstone Plaza in Irvine to New York Life Real Estate Investors for close to $51 million.
Equity Office also sold the 300,000-square-foot Fountain Valley City Center office campus to MemorialCare Health System in an August deal valued at about $67 million.
MemorialCare has its headquarters at the complex.
Software Firm Space Empty
The MacArthur Place properties would appear to carry the most risks among Equity Office’s latest local buys.
The 1 MacArthur office is listed as about 68% leased. Notable tenants include law firm Tobin Lucks LLP, insurance broker Andreini & Co., as well as real estate developer Nexus Cos., which built the two-building complex in 2000.
Santa Ana-based Nexus, which has also built high-rise residential towers and a hotel in the vicinity of the Twin Towers, sold the two offices to GLL Real Estate in 2004 and 2005 for a combined $114 million, or about $263 per square foot, according to brokerage data.
Brokerage data indicate the 2 MacArthur office is largely empty. MSC Software Corp. had leased most of the building under a long-term deal that expired this year.
The software company subleased a large portion of that space in recent years as it downsized. It moved its headquarters to a Newport Beach complex closer to John Wayne Airport this year after signing a 36,000-square-foot lease at an Irvine Company property.
