Los Angeles-based Maguire Properties Inc. announced the sale of City Plaza tower in Orange last week without divulging many financial details.
Now details are emerging, and they aren’t pretty.
Maguire sold one of its largest buildings in Central County to Los Angeles’ Hudson Capital LLC, which was founded last year by Victor Coleman, former head of office landlord Arden Realty Inc.
City Plaza is said to be trading hands for less than $55 million, or $168 per square foot, according to parties familiar with the transaction.
That’s close to 50% less than what Maguire valued City Plaza at in early 2007.
The sale was done in arrangement with the property’s lender, Maguire said.
Hudson Capital is effectively buying the loan on the building, with Maguire even chipping in a $1 million cash payment as part of the deal.
City Plaza had a $101 million loan on it at the end of June, according to statements from Maguire during its most recent quarterly conference call with analysts.
“The lender had written down the mortgage and had then offered it for sale,” said Nelson Rising, Maguire’s new chief executive, during the conference call.
Maguire isn’t seeing any benefit from the City Plaza sale, besides getting the 327,000-square-foot, 18-story building off its books, according to filings with the Securities and Exchange Commission.
During Maguire’s conference call, Rising said the company was aware that banks are trying to sell some of its loans at discounts, including at least one other for an OC office building.
45% Full
Maguire likely is glad to have City Plaza off its books. The building is about 45% full.
About a third of the space in Maguire’s office buildings in Brea, Central County and near John Wayne Airport was empty in the second quarter, according to the company.
A unit of defunct subprime lender Ameriquest Mortgage Co. had leased space in City Plaza until mid-2007.
Hudson Capital is paying cash for the office and plans to arrange a new loan once the market stabilizes, according to Coleman.
City Plaza is Hudson Capital’s first buy in Orange County. The company is looking to buy at least one other local office from Maguire, according to Coleman.
Maguire said it is taking up to a $22 million charge on the City Plaza sale, based on the cost of holding the building, which it acquired from Blackstone Group LP last year.
That’s on top of a $52 million charge the real estate investment trust recorded last month after it completed the sale of Irvine’s Main Plaza office campus to San Francisco-based Shorenstein Properties LLC.
Maguire made a nearly $2.9 billion roll of the dice on OC’s office sector in early 2007, buying 24 area buildings at the peak of the local commercial real estate market
Coleman said he plans to try to lease up City Plaza and make money off the deal from the building’s operations, rather than real estate appreciation. Cushman and Wakefield Inc. will be tasked with marketing the property, he said.
“There are certain marketplaces that have their challenges. But Orange County has proven (its resiliency) countless times,” Coleman said.
