A Hong Kong-based company that bills itself as a business incubator and investor in early-stage technology companies has taken a more down-to-earth approach with its first reported deal in Orange County: a land buy for a big apartment development in Irvine.
SkyOcean International Holdings Ltd. recently completed the purchase of two connected industrial buildings close to John Wayne Airport where a 371-unit apartment complex is expected to be built in a few years.
The company, which has its North American headquarters in Los Angeles, entered into a joint venture with a local partner to buy the properties at 17422 Derian Ave. for $30.5 million, according to regulatory filings.
The site is between Jamboree Road and Von Karman Avenue, a few blocks from the Diamond Jamboree shopping center.
SkyOcean has a 90% stake in the venture. Its partner—a Santa Ana-based company with ties to local architecture firm Alfa IDG—owns the remaining 10%.
Property Value
The deal works out to about $300 per square foot for the two existing buildings at the site, which are used by St. John Knits for some of its local operations.
The Irvine-based maker of women’s clothes has its headquarters across the street. Its lease on the buildings that the SkyOcean venture bought runs until early 2019 and calls for about $910,000 in annual rent, according to SkyOcean’s regulatory filings.
St. John uses the buildings for office space, manufacturing and warehouse operations, according to city filings.
The deal values the land at about $6.4 million per acre.
The property was sold by Great Far East Inc.—an Irvine-based commercial real estate company with funding from Chinese investors.
Great Far East bought the site in late 2013 for a reported $14.9 million and worked with Irvine-based entitlement consultants Starpointe Ventures to get it approved for apartment development about a year ago.
The midrise project is listed in city records as Pistoria and would run about 380,000 square feet. Individual units would range from about 550 square feet for studio units to 1,150 square feet for two-bedroom apartments, according to city filings.
SkyOcean estimates that the five-story project will cost $127 million to build, or about $342,000 per unit.
The development would kick off once the lease with St. John ends, according to real estate sources.
SkyOcean said it has conditionally agreed to invest at least $22.5 million, with the bulk of the development funded by debt financing.
The joint venture took out an $11 million loan from Alhambra Bank in Los Angles to fund the purchase, according to public records.
OC Entrée
The deal marks the first OC investment that SkyOcean is known to have made, although the company has made deals elsewhere in the Southland over the past two years.
It is one of several China-based firms that invested in Los Angeles-based mobile game publisher Firefly Games, which last month announced that it had raised $10 million in a second round of funding that values the upstart company at around $100 million.
The Firefly investment appears to be more in keeping with SkyOcean’s current main line of business, which its website describes as “providing entrepreneurship services to and investing in early-stage startups in the technology and cultural industries.”
In addition to its technology- and cultural-related ventures, which the company began to focus on last year, it said it also invests in the financial, real estate, and consumer goods industries.
Its stock is traded on the Hong Kong Stock Exchange and the company has a market valuation of about $325 million.
The Irvine development fits into the company’s larger business goals, according to recent SkyOcean regulatory filings pertaining to the land buy.
The company “has actively been seeking relevant investment opportunities with growth potential to expand its business portfolio, diversify its income source and possibly enhance its financial performance,” the filing said.
“Given the location of the project is close to the Silicon Valley where numerous established technology companies, startup companies and incubators are located, the board considers that the project represents a sound opportunity to expand the group’s incubation-related business” while also strengthening its overseas portfolio, the company said.
