LBA Realty, fresh off the highly profitable sale of a portion of its holdings in the Park Place mixed-use campus in Irvine, now has its eyes on another sizeable property in the city for a potential investment.
The real estate investor is under contract to buy Toshiba Corp.’s 26-acre office facility in the Irvine Spectrum, according to real estate sources familiar with the transaction.
The two-building property at 9740 Irvine Blvd. has about 450,000 square feet of office, manufacturing, warehouse and distribution space. It is near the intersection of Irvine Boulevard and Alton Parkway on the southern edge of the former El Toro Marine base.
It’s the largest facility in Orange County for Toshiba, which is the third largest foreign-owned company with operations here based on employee count.
The campus houses about 800 employees, with a number of Toshiba’s operating companies based out of the nearly 30-year-old facility.
Toshiba is expected to lease back the property from Irvine-based LBA under a short-term deal once the sale is finalized, real estate sources told the Business Journal.
The company is exploring its options for leasing space at one or more locations in Orange County for its varied operations once the short-term lease-back is completed, but no details about Toshiba’s future plans have been announced.
The local office of JLL is representing Toshiba in its search for new space, and marketing materials show Louis Tomaselli, senior managing director with the brokerage’s Irvine office, to be leading the sale process for Toshiba.
The price that LBA is expected to pay for the campus hasn’t been disclosed.
When Toshiba listed the property for sale in April, real estate sources familiar with the property told the Business Journal that a price between $80 million and $100 million was likely.
LBA is considering a few strategies for the campus, including turning it into a multitenant facility, according to sources. The plans would call for upgrades to the campus’ main office building, which has close to 100,000 square feet, and the nearly 350,000 square feet of industrial space.
The investor plans to discuss plans for the facility with city planning officials prior to the sale’s closing, which is likely to occur before year-end, sources tell the Business Journal.
Allianz
Plans for LBA’s expected deal in the Spectrum come as the privately held company announced the latest deal involving its largest and best-known property in its hometown, the Park Place campus in the Irvine Business Complex near John Wayne Airport.
Munich, Germany-based insurance company Allianz SE said last week that its U.S. real estate arm had acquired a 45% stake in 2.2 million square feet of office and retail space at Park Place, the 105-acre campus that LBA has owned since the last recession.
It’s the first direct investment in California for Allianz Real Estate, whose U.S. operations are based in New York, the company said.
Allianz is the parent company of Newport Beach-based bond giant Pacific Investment Management Co., which has invested in OC commercial properties in the past through some of its managed funds, though not directly.
The Park Place deal “underscores our commitment to investing in sustainable properties alongside the best owners and operators in their respective markets and asset classes,” said Christoph Donner, Allianz Real Estate of America chief executive, in a statement.
LBA’s purchase of the then-financially distressed Park Place campus in a series of transactions in 2009 and 2010 is widely seen as one of the most profitable commercial real estate transactions in OC since the recession.
The latest deal with Allianz, which was brokered by the local office of Eastdil Secured, reinforces that belief.
Since taking over the property and renovating it, LBA has added notable companies, including Western Digital Corp., Ingram Micro Inc. and Alteryx Inc., to its tenant base, boosting the occupancy of its buildings at the campus to about 90%.
Last year, Principal Real Estate Investors, a Des Moines, Iowa-based institutional investor, paid nearly $370 million for a 45% interest in LBA’s office and retail holdings at Park Place, according to CoStar Group Inc. records.
That’s believed to be more than twice what LBA paid for the entire campus, and doesn’t factor in profitable land sales the company has made to hotel and apartment developers there.
Terms of last week’s transaction—for a separate 45% stake in Park Place—were not disclosed by the two parties, but sources familiar with the transaction said that Allianz paid roughly $390 million, or 5% more than Principal Real Estate did for its stake.
LBA retains a 10% stake in the holdings, and will continue to manage the property.
The latest transaction values LBA’s holdings at Park Place—which include other commercial and residential property there—at roughly $860 million.
The joint venture with Allianz on LBA’s Park Place holdings “was a natural fit,” said LBA Managing Principal Phil Belling in a statement. “We have worked together on other investments and commercial mortgage financings.”
The Park Place transaction is LBA’s second big sale announced in recent weeks. Last month, the Business Journal reported that the company was preparing to sell a nearly 50-building portfolio of industrial assets it has on the West Coast to New York-based Blackstone Group for nearly $1.5 billion.
That deal, which includes a handful of assets in Orange County, is expected to close by November.
