The local office of development and investment firm Hines has made another notable office acquisition in North Orange County, buying the Anaheim headquarters of Pacific Sunwear of California Inc.
The Houston-based real estate firm, whose local operations are run from Newport Beach, recently closed on the purchase of 3450 E. Miraloma Ave., an 180,000-square-foot building on 7.7 acres a few blocks north of the Riverside (91) Freeway.
Terms of the purchase weren’t immediately disclosed, but about $30 million is likely, based on other recent office sales in and around Anaheim.
Hines bought the building in a venture with Oaktree Capital of Los Angeles, a frequent partner in its OC-based property deals.
The three-story office was built in 2002 and is fully occupied by the teen and young adult retailer, which employs several hundred people in Anaheim.
The company isn’t departing the office following the sale; the building was being marketed to investors by brokerage Newmark Knight Frank under the assumption PacSun would occupy the building under a 15-year lease.
PacSun will pay “an in-place rent that is equal to current market rents,” with annual 3% increases, according to Newmark Knight Frank.
The office was the last significant real estate property PacSun had owned in Anaheim. The company previously sold an industrial property and excess land next to the headquarters over the past decade, raising a little more than $30 million.
PacSun put the office up for sale in 2015 when the then-public company was trying to improve its balance sheet. It shelved the sale plan for a time last year when it filed for bankruptcy protection. The company later converted a reported $58 million in debt into equity for creditor Golden Gate Capital in San Francisco, which took it private and assumed ownership of the building.
PacSun operated nearly 500 retail stores as of earlier this year.
Since taking the retailer private, Golden Gate has invested an additional $20 million into it “to support the long-term growth of the business,” according to Newmark Knight Frank, whose Kevin Shannon, Paul Jones, Ken White and Blake Bokosky represented PacSun in the sale. The firm also helped arrange financing for Hines and Oaktree.
Current job listings for PacSun’s Anaheim office—there were 22 open local positions listed on its website last week—are heavy on e-commerce, social media, art and other marketing positions.
Active in North OC
Hines has recently invested largely in multitenant properties in Orange County, and has made several deals in Anaheim, Brea and other North OC markets in the past few years, but has occasionally bought buildings leased to single tenants. Last year, for example, it bought the Orange campus of staffing services Volt Information Sciences Inc.
A much larger deal involving Hines and a lease-back fell apart this year. A partnership between it and Pacific Investment Management Co. of Newport Beach was the expected buyer of the new Broadcom campus nearing completion in Irvine until Aliso Viejo-based developer FivePoint Communities Inc. exercised a buy-back option a few months ago.
A FivePoint affiliate ended up paying $443 million this past summer for the 1-million-square-foot office, where the chipmaker will lease back two of the four buildings.
4000 MacArthur
The Anaheim acquisition is one of two notable Hines transactions this month. Last week, it disclosed it finalized the sale of 4000 MacArthur, a two-building office tower in Newport Beach.
The Business Journal previously reported that an affiliate of Goldman Sachs was buying 4000 MacArthur, and that Hines would remain the property manager.
Last week’s announcement by Hines confirmed Goldman Sachs’ involvement in the deal for the 376,241-square-foot project but also said Hines will remain a part-owner of the campus. Its ownership stake in the venture with Goldman Sachs wasn’t disclosed.
The venture is believed to have paid about $180 million for the property.
Hines initially invested in the office in February 2015 with Oaktree Capital, which is no longer part of the ownership team. They paid about $120 million.
“With numerous capital improvements completed under our previous ownership, the office has been repositioned as a best-in-class Airport Area asset with a highly desirable Newport Beach address that delivers the very best to our tenants. We look forward to serving them for years to come,” Hines Senior Managing Director Ray Lawler said in a statement.
