San Francisco-based real estate investor Swift Real Estate Partners has made its third acquisition in Orange County in as many years, getting a two-building office complex in Fountain Valley.
The privately held company this month completed the purchase of Fountain Valley Plaza, which sits just north of the San Diego (I-405) Freeway on Talbert Avenue.
The buildings are next to the largest and most prominent office property in Fountain Valley: the headquarters of Hyundai Motors America.
The terms of the sale were not immediately disclosed, but industry sources said Swift paid close to $21 million for the approximately 107,000-square-foot complex.
A deal at that price equates to a little more than $195 per square foot.
An affiliate of Chicago-based Equity Office sold the property, which was acquired in 2014 as part of a larger portfolio deal with New York-based SL Green Realty Corp., according to CoStar Group Inc. records.
Equity Office is a unit of private equity giant Blackstone Group in New York.
The latest deal with Swift Real Estate was brokered by Paul Jones, Kevin Shannon, Blake Bokosky and Scott Selke with the capital markets team of Newmark Grubb Knight Frank.
Fountain Valley Plaza sits on about 4.6 acres. The two three-story buildings were about 91% leased at the time of the sale.
The largest tenant is Spec Services Inc., an engineering and project management firm that has its headquarters at the property and leases nearly half of the space there.
Other notable tenants include LA Times Communications, Pivot Technology Solutions, and AMC Inc.
OC Push
The complex was built in 1986 and renovated last year. The new owners are planning additional renovations to the site, according to Newmark Grubb officials.
“The buyer recognized the basis opportunity to add more value by making some minor capital improvements and bringing rents to market rates as leases expire,” said Kevin Shannon, president of Newmark Grubb’s West Coast Capital Markets team.
“Orange County is a great basis market at this point in the cycle,” he said.
Swift Real Estate, founded in 2010, has paid a little more than $60 million since 2014 snapping up midsized office properties in OC’s airport area and at the Irvine Spectrum.
It also invests in other areas of Southern California, the Bay Area, and the Pacific Northwest.
Its first South California purchase came in OC in 2014, when it paid a reported $15.1 million for 111 Pacifica, a three-story office in the Irvine Spectrum.
Last year it paid a reported $25.9 million for a trio of airport-area buildings on McCabe Way in Irvine that—like its latest deal in Fountain Valley—front the 405 Freeway.
“The greater airport submarket continues to experience positive market fundamentals, and Orange County as a whole remains a coveted destination for institutional investor groups seeking quality assets in strategic locations,” said Paul Jones, Newmark Grubb senior managing director.
Fund Investors
The funds for the Fountain Valley deal appear to be coming from a $400 million value-add real estate fund that Swift launched in September. The company said that fund—dubbed Swift Real Estate Partners Fund II—is close to closing.
Swift’s initial fund raised $329 million and has been used to buy 20 properties, including its first two in OC.
Investors in the company’s funds have included U.S. pension funds, endowments and foundations, as well as foreign investors and investment advisers, according to Swift, whose Irvine-based Southern California operations are headed by managing director Stephen Blue.
Blue previously held positions with Davenport Partners and Buchanan Street Partners, both based in Newport Beach.
