An Irvine office tower that holds the headquarters of Golden State Foods Corp. and other tenants is up for sale again in one of the largest transactions anticipated this year in the John Wayne Airport-area market.
A venture headed by a real estate investment affiliate of Bloomfield, Conn.-based healthcare insurance company Cigna Corp. recently listed the 18301 Von Karman Ave. office for sale. Offers should come this month.
The 230,615-square-foot, 11-story building last sold in January 2014 for about $68 million, or roughly $300 per square foot.
The property should bring closer to $90 million, or $385 per square foot, this time, according to real estate watchers.
The Irvine office of Cushman & Wakefield Inc. has the listing for the building, which is part of the four-building Von Karman Towers office complex a few blocks from the airport at the intersection of Von Karman Avenue and Michelson Drive. Buildings there are individually owned.
The property is about 90% leased. It was about 85% occupied when Cigna bought it in 2014.
Golden State Foods is the largest tenant at 18301 Von Karman and has its name atop the building.
The international supplier to McDonald’s and other fast-food restaurant chains leases about 60,000 square feet there in a deal effective through late 2024. The company employs about 120 in Irvine and over 6,200 overall.
Golden State took in about $7.3 billion in revenue last year, a 4.7% year-over-year increase, according to Business Journal data.
It’s the second largest privately held company in OC by revenue, trailing only Newport Beach-based Pacific Life Insurance Co., (see special coverage starting on page 1, list on 14).
Ups and Downs
The latest sale would mark the sixth time the building has changed hands in a little over a decade in a string of transactions that has included extreme pricing swings.
Chicago-based real estate investor Hearn Co. bought it in the summer of 2007 from Los Angeles-based Maguire Properties Inc.—later known as MPG Office Trust Inc.—for a reported $112 million near the peak of the last commercial real estate cycle. Maguire had owned the building for less than a year.
The property went for a sky-high $486 per square foot, more than $100 per square foot higher than most of the other individual office deals that year.
Hearn fell behind on loan payments beginning in the summer of 2009 and later that year turned the property over to an affiliate of Newport Beach-based KBS Realty Advisors, which in 2008 had bought a $76 million first mortgage and a $9 million mezzanine loan tied to the property at a discount from face values. KBS valued its investments in the loans at about $63.7 million (see coverage of KBS, page 3).
In 2010, a partnership between Irvine-based Greenlaw Partners and other institutional investors bought the building from KBS for about $41 million—or about $180 per square foot—when the office was only about 25% occupied. Greenlaw stayed on as a partner with Cigna in the new ownership group following the 2014 sale and has continued to manage the property.
About $3.4 million in capital improvements have been made to the building since 2010, including a fully renovated main lobby, new landscaping, elevators and upgraded corridors, according to Cushman & Wakefield, whose Jeff Cole, Ed Hernandez and Nico Napolitano have the listing for the property.
Office sale pricing in the airport area has been rising over the past year due to rising rents, falling vacancies, and projections of more growth over the next few years.
Last month the 1901 Main St. office in Irvine sold for about $66 million, or $382 per square foot, in the most expensive single-building office sale reported in the county so far this year.
The eight-story building was bought by J&R Group LLC, an Irvine-based real estate investor with a handful of other holdings in the city.
An earlier burst of high-end office sales in the airport area of Irvine—deals that closed late last year—brought prices of $340 to $350 per square foot.
Other notable Irvine-area properties on the block include the five-building Google Center campus near the intersection of Jamboree Road and MacArthur Boulevard. The property could bring close to $450 per square foot due to its location near the Irvine and Newport Beach city line and the presence of Google as a major tenant, among other factors.
