Glendale-based office and industrial property investor PS Business Parks Inc. has sold a five-building office park in Irvine to a local investor for nearly $42 million in one of three big Orange County property sales on the table for the company this year.
Irvine-based real estate investor Kelemen Caamaño Investments, which has found recent success buying and renovating older midsize offices in the area, last week closed on the purchase of Corporate Pointe, a campus of two-story buildings near the intersection of Jamboree Road and Barranca Parkway.
The Corporate Park road buildings, a short walk from the District at Tustin Legacy shopping center, range from 23,000 to 38,000 square feet and total about 161,000 square feet. They sold for nearly $260 per square foot.
PS Business Parks executives indicated last month that they anticipated the buildings to close with a capitalization rate of about 5%.
It’s Kelemen Caamaño’s biggest acquisition to date, according to Tibor Kelemen, who’s co-chief executive with Rudy Caamaño.
The real estate firm, backed by a number of local investors, owns and manages over half a million square feet of properties throughout OC, Los Angeles and Chicago, most bought in the past three years for redevelopment to more modern standards.
The new owners plan a major renovation of Corporate Pointe, which last traded hands in 2000 and whose buildings had little in the way of renovations under the prior ownership, according to Kelemen.
At least $8 million in upgrades to interior and exterior spaces, including lobbies and restrooms, are planned.
Upgrades to common areas will include new outdoor spots and a coffee shop.
The buildings are about 97% leased, though many tenants are operating on leases scheduled to expire in the next two years, so the new ownership group has a chance to move rental rates closer to the going rate for space in Irvine now, Kelemen said.
Suites range in size from 1,000 to 19,000 square feet. Recent leases at the complex have been at monthly rents of nearly $2.30 per square foot, roughly 25% below the going rent for similar, recently renovated buildings, according to CoStar Group Inc. records.
Kelemen Caamaño has plenty of experience in the immediate office market.
In 2015, it spent a reported $7.9 million to buy 96 Corporate Park, a 41,500-square-foot building nearby that it renovated and got a big-name tenant to lease a large portion—Elon Musk’s SpaceX. Bomel Construction, which moved its headquarters to the building last year, paid about $15 million for it in 2016, CoStar records show.
2 More Sales
Glendale-based PS Business Parks, a real estate investment trust valued at about $3 billion, owned seven OC business parks with nearly 2 million square feet of space late last year.
Three of those, totaling 705,000 square feet, including the recently sold business park in Irvine and sites in Orange and Santa Ana, were listed for sale last year. Two others for sale include Orange County Business Center, a five-building, 440,000-square-foot park on East Dyer Road in Santa Ana, and Orangewood, a two-building park in Orange that runs 107,000 square feet.
The Irvine, Santa Ana and Orange properties brought $8.4 million in net operating income last year, according to regulatory filings.
“They are really good assets that are well-placed, (and) desirable right now,” said PS Business Chief Executive Maria Hawthorne last month on her company’s latest earnings call.
Orange County Business Center was under contract to sell last month, Hawthorne said. Though Orangewood wasn’t under contract, it’s still being marketed for sale and is expected to trade hands this year.
