A San Francisco-based investor backed by funds from the California State Teachers’ Retirement System has bought a two-building office complex in Irvine in a deal believed to have topped $60 million.
GI Partners is a private investment firm that oversees about $12 billion in pension fund and other institutional investors’ money through private-equity investments and real estate holdings. Last week it acquired pair of buildings at Alton Corporate Plaza, a low-rise office campus a few blocks from The District at Tustin Legacy shopping center.
The two-story buildings, at 1733 and 1833 Alton Parkway, total about 209,000 square feet and are fully leased to aviation electronics maker Rockwell Collins Inc.
Terms of the deal were not immediately disclosed. A deal near $300 per square foot appears likely, which would indicate a sale price approaching $60 million, if not more, according to real estate sources familiar with the property.
Only one other office in the market around John Wayne Airport has sold for more than $60 million this year, according to CoStar Group Inc. records—1901 Main Street in Irvine, which went for about $66 million in May.
Hines, Oaktree
The buildings at Alton Corporate Plaza were sold by a venture headed by Houston-based Hines Interests LP and a real estate fund managed by Los Angeles-based private-equity firm Oaktree Capital Management LP.
Hines and Oaktree paid a reported $32.5 million, or roughly $160 per square foot, for the buildings in 2011, in one of the two companies’ first joint office deals in Orange County.
The investors subsequently partnered to buy several million square feet of office space in the area over the past five years, including deals made this year.
The buildings previously held the local banking and mortgage operations JPMorgan Chase & Co., which vacated the offices when it closed its Irvine location in 2013.
Rockwell Collins moved its regional headquarters from Tustin to take over the two offices, which it uses to make in-flight entertainment, cabin electronics, and other electromechanical systems.
The local unit of Cedar Rapids, Iowa-based Rockwell has a 12-year lease at the property, which has seen $18 million in tenant improvements and other upgrades in the past few years, according to marketing materials from the Newport Beach office of brokerage HFF LP, whose Ryan Gallagher, Derreck Barker and Nick Foster worked on the deal.
The technology background of the tenant played a big part in GI Partners’ acquisition of the two buildings, according to the buyer.
GI Partners said the purchase was made through DataCore LP, a $500 million real estate fund it manages on behalf of pension fund giant CalSTRS.
DataCore, formed in 2012, is “a core investment vehicle to invest in technology-advantaged real estate in the United States, including data centers, internet gateways, corporate campuses for technology tenants, and life science properties,” according to GI Partners.
The DataCore fund has been used to buy about 3 million square feet of properties in the U.S., the company said.
The Irvine deal is the first in OC for GI Partners.
“We are pleased to gain access to this robust and growing market,” said Mike Armstrong, GI Partners principal, in a statement.
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The two other buildings at Alton Corporate Plaza—both on Aston Street—total another 114,000 square feet.
The larger of the buildings, at 16800 Aston, is fully leased to Spireon Inc., a provider of GPS and related mobile resource management technologies, while the second building is about two-thirds leased to various tenants.
Hines and Oaktree bought those two buildings in mid-2012 for a reported $11.2 million and have put another $5.8 million into upgrading the offices.
All four buildings at Alton Corporate Plaza were initially listed for sale as a single property. The deal with GI Partners split the bunch, though, and the remaining two buildings have been put back on the market, according to HFF’s Gallagher.
An asking price for those two buildings hasn’t been disclosed.
Despite the Irvine sale and a sale in Yorba Linda last month estimated at $95 million, Hines remains on the lookout for other OC acquisitions, said Ray Lawler, who heads the company’s local office.
“We’re actively buying as well (as selling some older assets),” he said.
