Pacific Property Continuing Aggressive Southland Apartment Strategy
COMMERCIAL
The former Unocal building in Costa Mesa is back on the block.
The 12-story, 236,000-square-foot building at 555 Anton Blvd. is being marketed by current owner Amstar Ltd. of Denver. Asking price is believed to be about $60 million, or $254 a foot. The sale could be complicated by the large number of tech-related tenants on the property, an increasing source of concern for wary buyers who are conscious of tech and Internet firms’ sagging fortunes on Wall Street.
The building, one of three sister granite buildings, is being marketed by Jon Nesbitt, director of Cushman Realty Corp.’s Irvine office. In addition to the tech-based tenant roster, the building also sits on a ground lease, which is another concern, said a source who is a potential bidder for the property.
“You have two strikes against you” when you buy it, the source said.
The building was purchased by Amstar in 1998 for roughly $40 million from Bank of America, which acquired the property when it merged with Security Pacific Bank.
For many years, the property was fully leased to Unocal 76 Products, which invested roughly $30 million in improvements and whose logo atop the building became a fixture. However, when Unocal 76 Products was acquired by Tosco Corp., the building was vacated as Tosco moved most of the operations out of state.
When Amstar acquired the property it was 100% vacant. Amstar officials proceeded to lease the building as part of a short-term hold strategy. Moreover, for the first time in many years, the building became home to more than one tenant.
Thanks to Unocal’s improvements, there wasn’t a lot of work needed for Amstar to convert it to multi-tenant uses.
Among the major tenants are BMC Software (which occupies 70,000 square feet), J.D. Edward & Co. (40,000 square feet), Epoch Internet (43,000 square feet) and Tickets.com (40,000 square feet).
RESIDENTIAL
Palo Alto-based real estate investment firm Pacific Property Co. continues its strong push into Orange County and Southern California, having recently tied up the 406-unit Applewood Apartments complex in Santa Ana.
When completed, the deal will push Pacific Property’s total investment in OC in the past couple of years to $46 million and its portfolio to nearly 1,000 units. The company has been equally aggressive in Los Angeles County, where it has spent $55 million and has another two deals worth $18.4 million pending.
Pacific Property recently announced that it had entered into a contract to acquire an additional 250 units in Southern California, which will give it a portfolio of more than 3,500 units in the region.
Philip Shuster, regional director of acquisitions for the company’s Southern California operations, doesn’t figure to slow down any. He said he is shopping for more deals on a “daily, hourly” basis.
“I would buy 10 more tomorrow if I could find them,” he said.
Shuster sees the robust OC economy continuing strong. And while some analysts are predicting a slight slowdown in the rate of growth, it is not a major concern to Shuster and Pacific Property when it comes to the multi-family market.
“I don’t see (much) new development and I don’t see any land available,” he said.
Not only that, but most new development,given the high cost of land in Orange County,is focused on the high-end niche, where apartments can command rents of $2,000 and up. That isn’t Pacific Property’s niche, Shuster said.
“Unless people leave Orange County and go to the Inland Empire, short of that I don’t see a real softening (in vacancy) coming in the near future,” he said.
But just in case an increasing number of people do decide to head for the Inland Empire, Pacific Property is working to build a portfolio there as well. The company recently hired 10-year industry veteran David LeBeau from Fairfield Real Estate Investments to be the acquisitions manager in the Inland Empire and San Diego County.
“I’ve been trying to cover all of Southern California myself and it’s gotten to be too much,” Shuster said.
LeBeau’s primary focus will be on San Diego County, although Inland Empire deals will be seriously evaluated, Shuster said.
St. Clair Tackles Beaumont Project
Newport Beach-based The St. Clair Co. recently broke ground on development of its 533-acre Oak Valley Greens masterplanned community in Beaumont.
The golf course community,being built near an existing 18-hole golf course,will total 2,537 homes. The St. Clair Co. is developing the property with Westbrook Partners.
Phase One grading is under way, with completion scheduled for next month. The marketing of lots to homebuilders also has begun. Home sales to the public are scheduled to being in spring 2001. The project is being marketed by Costa Mesa-based O’Donnell/Atkins Co.
