Maguire Properties Inc. has been involved in the largest office deals in Orange County for each of the past two years, as both a buyer and a seller.
If things go well for the Los Angeles-based landlord, another Maguire deal,a sale of its most valuable and high-profile OC office building,will again top the list this year.
Officials for Maguire said last week that is in the “final stages” of the sale of 3161 Michelson, the upscale, 19-story Irvine tower that opened its doors in 2007 next to the San Diego (I-405) Freeway.
The company’s found a “very qualified buyer” for the 531,000-square-foot building, said Nelson Rising, Maguire’s chief executive. The company has received a deposit for a potential sale and the buyer is conducting due diligence, Rising said.
The prospective buyer was not disclosed. Buzz in the industry is focusing on a New York-based investor,with a local presence in Newport Beach,that is known for taking on underperforming assets.
Maguire expects to close a sale by the end of the year, Rising said last week during a call with analysts.
A stand-alone sale of 3161 Michelson marks a shift in strategy for Maguire, which has been anything but predictable in its OC operations during the past few years. Last year, the company announced plans to sell its entire Park Place complex, including 3161 Michelson, in one mega-deal.
The 105-acre Park Place campus counts nine buildings totaling about 2.2 million square feet of office space, along with shops and two high-rise condominium towers.
Real estate brokers initially thought Maguire could get $700 million or more for the campus, which it bought in two separate transactions in 2004 for a combined $475 million. As time passed and the local market slowed, guesses for what price the campus could get began dropping sharply.
Price erosion made a sale of Park Place less likely, Rising said last week.
“The world changed radically since (summer),” he said.
A sale of 3161 Michelson, considered to be one of the best office towers in the county, could help the local market get a better sense of where the values of high-end offices stand.
The building’s been valued at about $244 million, or $460 per square foot. The real estate investment trust is not disclosing what it hopes to get from the sale, but some expect it to be less than that.
Maguire said it took a $50 million non-cash impairment charge on the property last quarter in connection with its decision to classify it as held for sale.
High Price Tag
There has only been a handful of large deals topping $300 per square foot in the past year,and none in excess of $400 per square foot.
One of those topping $300 per square foot was for another one-time Maguire property in Irvine, the 607,000-square-foot Main Plaza office complex. San Francisco-based Shorenstein Properties LLC bought the property for $211 million last July, in the largest office sale of 2008.
Despite getting Shorenstein to pay some $348 per square foot for the office, Maguire still took a $52 million hit on the sale of the property, which it acquired in 2007 as part of its ill-fated, $2.9 billion buy of Equity Office Properties Trust’s local portfolio.
A new owner of 3161 Michelson will get a building with some cash flow.
The building has added two big tenants since the summer, signing Hyundai Motor Finance Co. for nearly 100,000 square feet, and law firm Jones Day for another 53,000 square feet.
The building,originally slated to hold the headquarters of defunct subprime lender New Century Financial Corp.,now is about 62% leased, the landlord said.
Maguire still has other issues to work out in OC, where its portfolio of 7 million square feet stood at 66% full at the end of the year.
The company said last week it is in talks with its lender for its City Parkway tower in Orange. Occupancy at the 457,000-square-foot building stands at about 30%. Another Maguire property with loans coming due soon is the company’s Griffin Towers project in Costa Mesa.
