The Atrium building in Irvine, one of the most unique office properties in the area around John Wayne Airport, has a new owner—and plans for a major renovation.
Kelemen Co., a new commercial property investor and developer based in Irvine, recently closed on the purchase of the 10-story building on Von Karman Avenue that totals 302,877 square feet.
The building sold for $106.8 million, or $352 per square foot, in a deal brokered by the local capital markets team of Newmark Knight Frank.
It was sold by Barings Real Estate, the real estate investment arm of Charlotte, N.C.-based investment management firm Barings LLC. Brokerage records show Barings had owned the property since 2000, when it paid $60 million for it.
The tower is about 90% occupied by a variety of tenants, including Irvine-based shared-space operator Premier Business Centers and law firm Severson & Werson.
The building’s best-known occupant is restaurant Bistango, one of the area’s top spots for power lunches. It’s in the glass-covered atrium area of the building, which was built in 1986. The restaurant has been there since 1988.
Barings said it put about $5.3 million into the building since 2015, upgrading the lobby, common areas, courtyards, restrooms and elevator.
More upgrades are on the way, according to Tibor Kelemen, founder and chief executive of the new ownership group.
“We’ll be aiming for a hospitality vibe,” said Kelemen, who’s planning a variety of tenant amenity-focused changes to the indoor courtyard area, including the addition of an upscale coffee shop and more spaces for employees to meet.
Other upgrades will include the addition of solar panels and other environmentally-friendly features, the reintroduction of palm trees to the interior of the property, and constructing a 5,000-square-foot fitness center in the basement. The gym will be one “people will actually use,” Kelemen said.
The new owner said the Irvine investment “will be a longer-term opportunity for us.”
The property’s about a mile from the airport at 19100 and 19200 Von Karman Ave. The buildings are on about six acres just south of Allergan PLC’s Irvine campus (see story, page 3).
New Firm
Keleman’s no stranger to fixing up older properties. He previously served as a partner for Irvine-based Kelemen-Caamano Investments LLC, one of Orange County’s first real estate groups to embrace creative-office redevelopment in the area. The company, formed in 2015, snapped up and renovated a series of low-rise properties in the airport area, including buildings now owned or used by Irvine-based Edwards Lifesciences Corp., Taps Brewery and Elon Musk’s SpaceX.
Kelemen and Rudy Caamano, the Irvine investor’s other founder, are now doing deals separately. Kelemen said he recently sold Wind Water Real Estate, an Irvine-based brokerage he started a few years ago, to Caamano.
“I’m a lot more passionate about the development game,” he said.
The Atrium buy marks his 11th office repositioning project in OC.
One of Kelemen-Caamano’s largest investments, a four-building portfolio at the Centerpointe Irvine complex—the intersection of Jamboree Road and MacArthur Boulevard—sold last month, just before the Atrium transaction was completed.
Circle Vision LLC, a longtime agricultural company based in Placentia that’s been transitioning into the real estate investment business in the past few years, paid $33 million for the Centerpointe buildings. Kelemen-Caamano paid a reported $27 million for them in January 2017.
Keleman said some of the money from the sale will go toward the Atrium acquisition—his largest-ever deal.
His primary financial partner in the Atrium deal is Frank Dai, founder of Irvine-based United Scope, a maker of microscopes and accessories. The company, whose products are sold largely under the AmScope name, was sold to private equity investor L Squared Capital Partners this past February on undisclosed terms.
While the Atrium is larger and more expensive than his prior deals, “it’s the same game as what we’ve done [before],” said Kelemen, whose company’s also close to buying a larger property in the Los Angeles area.
The Irvine deal was financed through a $79.8 million loan arranged by Joe Giordani, vice president at the Newport Beach office of NorthMarq Capital LLC.
The lender was described by NorthMarq as “a large asset manager with aggressive foreign capital.”
“The debt markets remain extremely liquid, and [the buyer] was able to choose a partner who recognized Kelemen’s ability to reposition institutional-quality assets by utilizing his creative vision, attention to detail, and local market knowledge,” said Giordani, who noted the Atrium deal was the largest he’s worked on to date.
Active Newmark
The Atrium transaction is the second-priciest sale of a one-building office in Orange County this year, according to CoStar Group Inc. records. The largest was KBS Realty Advisors’ $147 million buy of the 21-story City Tower in Orange in February.
The transaction’s also the fourth office sale to top $100 million in Orange County so far this year. The Newmark Knight Frank capital markets team noted that it represented the sellers on three of the four sales, including the Atrium transaction.
Newmark’s Kevin Shannon, Paul Jones, Ken White, Brunson Howard and Blake Bokosky represented Barings Real Estate in the recent sale, and Kelemen Co. represented itself.
“There continues to be a tremendous amount of both foreign and domestic capital focused on acquiring best-in-class office properties throughout Orange County, and we see this continuing into 2019,” Jones said.
