Los Angeles-based Maguire Properties Inc.’s attempts to unload some of its largest and most expensive Orange County office buildings come amid a market that’s seen few large deals for much of this year.
But the company’s latest sale,qualifying as one of the few large deals this year,shows Maguire is seeing some interest.
Maguire said last week it was selling its Main Plaza office campus in Irvine to San Francisco-based real estate investor Shorenstein Properties LLC for $211 million. A sale of the property, which includes two 12-story towers on Main Street, had been rumored since late last year.
It’s the largest office deal seen this year, by a long shot. OC hadn’t seen a $100 million office sale yet this year, after several years of more expensive properties selling like hotcakes.
There have been fewer than 10 deals exceeding $100 million for office buildings in Southern California and Arizona this year, according to Kevin Shannon, vice chairman for the Torrance office of CB Richard Ellis Group Inc. Several of those deals were reached last year and didn’t close until 2008.
While pricey, the Main Plaza sale also appears to confirm the reality of declining values of area properties. The 607,000-square-foot Main Plaza property sold for about $348 per square foot.
At the peak of the commercial real estate market in early 2007, the buildings likely would have sold for nearly $100 per square foot more, according to brokers.
The realities of the market mean that Maguire is likely to face a tough task in finding a high-priced bidder for an even larger property on the block, its Park Place campus.
The real estate investment trust, which is looking to cut debt, said last month it planned to sell Park Place, its largest and most prominent campus in OC. Eastdil Secured LLC, part of San Francisco-based Wells Fargo & Co., is marketing the buildings.
Maguire bought the 105-acre Park Place campus in two separate deals in 2004 for a combined $475 million.
Since then Maguire has built an office on the campus, the 531,000-square-foot 3161 Michelson tower, which the company valued at $244 million.
Park Place now counts some 2.3 million square feet of office space, room for additional condominiums and apartments, and 120,000 square feet of retail space. Plans are in the works for a major redevelopment of the retail portion of the center.
Maguire officials likely are hoping to sell Park Place for at least $700 million, if not more, according to investment officials.
The decision to sell Park Place, and the completion of the Main Plaza sale, was made one month into the job for Nelson Rising, Maguire’s chairman and chief executive.
Rising, the former head of Catellus Development Corp., now part of Denver-based ProLogis, said the sale would help the company reduce debt. Maguire has been in tough financial straits since buying some $2.9 billion of OC offices last year.
A few parties,including one very familiar with the buildings,have been mentioned as potential buyers of Park Place, according to real estate sources.
Founder Bid?
Maguire’s founder and former chief executive Robert Maguire could look to buy the property,if he can line up the funding, according to knowledgeable sources. Park Place is said to have been considered a pet project of Maguire, who was removed from company’s top spot in May.
Irvine-based LBA Realty was also rumored to be interested. In early 2007,prior to the credit crunch, Steve Layton, LBA principal, said the company could spend as much as $1.8 billion buying buildings by 2010.
The Irvine Company was said to have taken a look at the property, but the Newport Beach landlord,which is usually rumored to be a buyer for any high-end OC property on the market, including the Main Plaza buildings,opted against bidding, according to sources.
Other bidders that have considered buying all of Maguire’s portfolio also could be interested in select assets of the company. Santa Monica-based Pacific Office Properties Trust Inc. was said in June to have considered a bid to buy Maguire for about $970 million, but withdrew the offer after being rebuffed by the company.
