Newport Beach real estate investor WCB Properties LP has acquired Union Bank Square, a nearly 400,000-square-foot set of office buildings in Orange, for $92 million.
WCB bought the buildings with a real estate investment unit of UBS AG.
Colton Co. of Irvine sold Union Bank Square. The company paid a reported $43.5 million for the buildings in early 2000.
Union Bank Square has two 12-story towers, one six-story building and a single-story building at the corner of Main Street and La Veta Avenue. It was one of the first multiple-building office projects built in Orange County, completed between 1962 and 1967.
WCB Properties plans to spend $4 million or so fixing up Union Bank Square to improve the look of the buildings, according to Terry Thompson, the company’s vice president of acquisitions.
The real estate investor has stayed local with its recent buys. Including Union Bank Square, WCB Properties has bought close to $270 million of local real estate since early 2006. Those deals cover more than 1 million square feet of office space in the county.
Union Bank Square is about 95% full. PM Realty Group of Irvine is managing Union Bank Square for WCB.
Union Bank of California is the namesake tenant. The Orange County Transportation Authority has its headquarters at one of the buildings, 600 S. Main St.
The complex also is home to one of the state’s larger dental health maintenance organizations, Western Dental Services Inc.
Another building holds the bulk of administrative offices for St. Joseph Health System, which recently renewed its lease at Union Bank Square. St. Joseph Hospital-Orange is within walking distance from the building.
Colton was seeking monthly rents in the range of $2.50 per square foot for the buildings.
Office rents in Central Orange County averaged $2.44 per square foot in the second quarter, a 22% increase from a year ago, according to the latest data from CB Richard Ellis Group Inc. Vacancy rates in the area are 8.9%, up from 7.9% a year ago.
WCB sees room for higher rents at Union Bank Square, according to Thompson.
“Our objective here is to take advantage of the rising tide of the market,” he said.
Other area offices that have just sold are likely to see even heftier increases to justify their own acquisitions, according to Thompson.
Earlier this month, Maguire Properties Inc. sold two Orange office buildings, an Irvine tower and a development site in Orange to Muller Co., a Laguna Hills-based commercial developer, and Rockwood Capital LLC of Greenwich, Conn., for $310 million.
Including the development site, the Maguire sale went for about $262 per square foot. The WCB buy of Union Bank Square went for $231 per square foot.
The deal keeps with WCB’s investment strategy of buying well-known buildings that have seen better days, upgrading them and leasing them up.
Local deals include the $78 million buy of Santa Ana’s Xerox Centre in early 2006. WCB leased up the building by more than 10%, to 95%, a few months after buying the city’s most recognizable tower.
Last June, it paid a reported $100 million for a five-property portfolio of office, retail and research and development buildings from Denver-based ProLogis. That deal included the acquisition of the Pacificenter Anaheim office complex in Anaheim Hills.
The company’s strategy allows for market fluctuations, Thompson said, including the effect of the subprime mortgage sector’s downsizing in Central County.
“We think there could be some bumpiness in the near-term,” Thompson said. “But we’ve done our homework on the area.”
WCB doesn’t rule out similar-sized deals this year, Thompson said.
It’s also considering moving ahead with a couple of development projects in Southern California, he said.
Robert Smith of CB Richard Ellis’ Newport Beach office worked on the sale of Union Bank Square. Mark Friend and Andy White of CB Richard Ellis are handling leasing for the complex.
