COMMERCIAL
A deal in Triple Net Properties LLC’s own back yard was too good to pass up.
An affiliate of Santa Ana-based Triple Net, which pools together investors to buy real estate, recently bought a four-story office building in Santa Ana at 901 Civic Center Drive. The building is across the street from the Orange County Superior Court and Civic Center Plaza.
The price for the class B building was $14.4 million, or about $140 per square foot. Triple Net’s director of acquisitions, Brendan Considine, and Grubb & Ellis Co.’s Jeff Hanson and Ryan Gallagher, represented the company in the acquisition.
The buy went against the grain for Triple Net. The company has a goal of buying about $1.7 billion in buildings this year. But it hasn’t been looking to buy much in Southern California of late.
New markets, such as Austin, Texas, Nashville and Philadelphia, are expected to see more buying by Triple Net.
Among larger recent deals, Triple Net last month paid $74 million for an 11-story building in Aventura, Fla., which went for about $345 per square foot.
“We’re still looking in Southern California,” said Louis Rogers, the company’s president. “But now it’s generally been a better time to sell.”
Triple Net’s buildings, which total about 30 million square feet, have a market value of about $3.8 billion, according to the company.
About $1 billion of that is set to be sold this year, with Southern California buildings comprising a good part of those sales.
The Santa Ana building is 67% full with tenants, including the FBI. Another government agency is considering taking most of the vacant space, according to Triple Net.
The 901 Civic Center deal also is noteworthy because of the seller: Santa Ana real estate king Michael Harrah.
An affiliate of Harrah’s Caribou Industries Inc., who owns about 50 buildings totaling 3 million square feet of space in Santa Ana, paid a reported $8.4 million for the building three years ago.
It’s the second big sale in as many months for Harrah, who has been trying to line up financing and tenants for his planned $86 million, 37-story One Broadway Plaza office tower in Santa Ana.
In April, Harrah said he was selling Santa Ana’s historic Masonic Temple to the Church of Scientology for an undisclosed price. Proceeds are going toward early work on the tower. A couple more sales are in the works for Harrah, according to brokers.
RESIDENTIAL
Getting It Right
A headline in last week’s column messed up the name of Guthrie Development Co.
The rest of 2006 promises to be a challenging time for homebuilders, especially public companies under the gun to keep sales up, said Jay Moss, Southern California general manager for Los Angeles-based KB Home.
Moss spoke at an event in Irvine earlier this month sponsored by the commercial real estate division of Orange County’s Jewish Federation.
He declined to characterize the downturn in home sales as a sign of a bubble bursting.
“But it still doesn’t feel good,” said Moss, who heads KB’s OC division from Irvine. “It’s a little rocky and it’s getting rockier.”
It likely will take until the end of the year before the dust settles and supply and demand are in balance, he said.
Select Western markets in Arizona and Nevada are likely to see price drops of 10% to 20% as public companies work hard to sell homes that are wrapping up construction, Moss said.
In California, the Inland Empire is more likely to see slipping in prices, while coastal areas like OC are likely to remain more stable.
That’s not to say that OC is out of the woods. The increase in high-rise condominium projects is a variable, since the extent of local demand for these homes still is unknown, Moss said.
“If you have your building sold, you’ll be in good shape but some people are going to get hurt,” he said.
KB Home has one project in the works in Anaheim’s Platinum Triangle. It should total about 260 homes. Predicting market forces two years from the time ground is broken to when the project would be completed is a big challenge,and risk,Moss said.
“Once we start digging, that rocket ship has launched,” he said.
Platinum Triangle Condos
The Aliso Viejo office of Lennar Corp. marked the official start of construction at its A-Town project in Anaheim last week.
Meanwhile, some other developers already have begun moving ahead with their own plans at Anaheim’s Platinum Triangle.
The local arm of Atlanta-based Beazer Homes USA Inc. broke ground earlier this month on a condo project called Platinum Centre at State College Boulevard and Katella Avenue. The company plans 265 mid-rise homes at the site.
On the opposite corner of Beazer’s project, Windstar Communities, an arm of San Diego-based Nexus Properties Inc., is nearly done with about 390 homes that were originally built as apartments and now are condos.
