The local office of real estate investment and development firm Hines Interests LP (see related story, page 4) has emerged as the likely buyer of the massive office campus being built for Broadcom Ltd. in Irvine.
The Newport Beach office of Hines has purportedly beaten out a number of other local development firms and large institutional investors, real estate sources tell the Business Journal.
The 73-acre campus includes four mid-rise offices under construction as part of a first phase of development that’s slated to total about 1.1 million square feet.
The deal also is said to include excess land at the campus that Broadcom initially envisioned as a site for nearly another million square feet of office space in future phases of development, according to real estate sources familiar with the proposed transaction.
The Gensler-designed campus broke ground last year, and construction has been steady over the past few months. The first phase is expected to be ready for occupancy by late next year or in early 2018.
It’s the largest commercial office project to be built in Orange County in over a decade.
The transaction between Hines and Broadcom is expected to involve a number of components, including a lease-back of a portion of the buildings to Broadcom—long OC’s largest office tenant—which no longer needs all of the space under construction.
The chipmaker has shed hundreds of local jobs since its $37 billion sale to Avago Technologies Ltd. this year.
Neither the sales price that Hines is expected to pay for the Irvine property, nor the terms of the leaseback, have been disclosed.
Broadcom regulatory filings from last year indicated the entire campus was estimated to cost about $800 million to build, factoring in the price it paid for the land.
The deal ultimately could become the most expensive single-property commercial real estate sale in Orange County history, sources familiar with the transaction tell the Business Journal. That indicates a total investment of $1 billion or more if Hines opts to retain and build out the entire campus.
Hines officials declined requests for comment on the transaction, which sources say is not expected to close until early next year, at the earliest.
Other knowledgeable parties also declined to comment, citing the transaction’s strict confidentiality agreements.
Broadcom officials didn’t make reference to the campus sale last week, while reporting its latest quarterly earnings.
The company said last week that it expected to spend close to $500 million next year to build the Irvine campus, in addition to new office facilities it is building in San Jose.
Changing Plans
The campus is going up on the southern edge of the former El Toro Marine base near the intersection of the San Diego (I-405) and Santa Ana (I-5) freeways and close to the train station in Irvine.
It’s the first commercial real estate project built on the Great Park Neighborhoods development site.
Broadcom paid about $156 million for the site, including the price of the land, taxes and other fees, in March 2015.
The land was sold by Aliso Viejo-based FivePoint Holdings LLC, the master developer of Great Park Neighborhoods.
After the deal was completed last year, the chipmaker announced a deal to sell the company to Singapore-based Avago, which kept the Broadcom name following the sale but now has its U.S. operations based in San Jose.
The Business Journal first reported on Broadcom’s plans to sell all or a portion of the campus this past April, a few months after the company announced 700 job cuts in Irvine, including the core of its local executive team, in the wake of the sale to Avago.
Broadcom officials have vacillated in their sales plans for the campus over the course of the year, real estate sources say. The company now is in favor of selling the entire property, the sources said.
OC Trophy
The Irvine deal, if completed as being discussed, would be the most prominent Orange County property for Hines, one of the country’s largest privately-held real estate firms. It has more than $90 billion in assets under management companywide.
It has bought several million square feet of office space in OC the past seven years or so, building up one of the largest local commercial real estate portfolios outside of Newport Beach-based Irvine Company.
Prominent properties it owns here include the 4000 MacArthur office tower complex in Newport Beach and the under-redevelopment Intersect campus near John Wayne Airport in Irvine, as well as several properties in North OC.
The company has partnered with Los Angeles-based private equity firm Oaktree Capital Management LP for a bulk of its local purchases.
Intersect—the multibuilding former home of Washington Mutual’s local operations—was bought last year through a venture with Pacific Investment Management Co. in Newport Beach (see related story, page 1).
The financial partner, or partners, that Hines plans to use to buy the Broadcom campus are not known.
