CB Richard Ellis Investors LLC’s Strategic Partners, a real estate investor and pension fund adviser, has made its first Orange County deal by buying 3 Hutton Centre in Santa Ana.
The division of Los Angeles-based CB Richard Ellis Inc. bought the 10-story Hutton Centre building from ORIX Real Estate Equities Inc., part of Japan’s ORIX Corp. Terms weren’t disclosed, but ORIX had asked $34 million, or roughly $177 a square foot, for the 198,511-square-foot high rise. ORIX had owned Hutton Centre since the 1980s.
“It was the right time for (ORIX to sell), though they waited a lot longer than most Japanese firms,” said Robert Smith, a vice president with CB Richard Ellis’ Newport Beach office.
Built in 1985 on 2.5 acres, 3 Hutton Center is 94% occupied. Among the 18 tenants are Denver-based engineering firm CH2MHill, ERM-West Inc., a unit of British environmental consultant ERM Group Inc., and local law firm Callahan & Blaine. CH2MHill is the building’s largest tenant, with 65,000 square feet.
Smith, Michael Kane, Karen Scholte, John Weiner and Jeff Morgan from CB Richard Ellis’ Newport Beach office and Michael Schramm of the firm’s Chicago office represented both parties in the deal.
Initial plans call for Strategic Partners to hold the building for three to five years, raise rents and then sell it, according to Smith.
“The fund thinks there’s a strong upside to the area,” he said. “It has taken some time, but now it’s all coming together. Hutton Centre is evolving nicely, with new retail and two new hotels going up, improvements to the 405 (Freeway) access and new residential being built.”
Along with an existing Double Tree Club hotel, a second, larger Doubletree Hotel is planned for the area. And Santa Ana’s City Council has approved development of a Spring Hills Suites adjacent to 3 Hutton Centre, according to a city spokesman. The hotel would be the first in OC for Spring Hill Suites, a division of Marriott International Inc., which purchased the site in the fall for an undisclosed amount.
“Spring Hill Suites is more of an extended-stay product,” said Alan X. Reay, president of Costa Mesa-based Atlas Hospitality Group, which specializes in hotel sales. “It’s a complement to the Residence Inn also owned by Marriott and would compete more with Staybridge Suites of Holiday Inn.”
The six-building, 1.3 million-acre Hutton Place complex is built around a 3-acre lake and includes an Edwards movie theater and shops nearby.
Established in June, CB Richard Ellis Investors manages some $10 billion in real estate investments, including $750 million under Strategic Partners.
