Emmes Group of Cos.’ ownership of the Michelson office tower in Irvine from 2009 to 2012 was said in a recent market report to be the shrewdest office investment in the state in recent years.
Real estate research and data firm CommercialCafe.com recently came out with a listing of the top 15 office resale gains in the U.S. during the five-year period ending this year. It’s heavy on New York, Chicago, and Boston-area transactions, 13 of the entries being from those locations. The top deal was the 2012 sale of downtown Seattle’s Russell Investments Center for $480 million.
Insurance firm Northwestern Mutual sold the Seattle property to Los Angeles real-estate investment and management firm CommonWealth Partners at a $325 million premium to what it paid in 2009.
New York-based Emmes didn’t do too bad with its investment in the Michelson tower, either. It bought the trophy office property from the building’s developer, Maguire Properties Inc., in 2009 for $160 million, and sold it three years later to Toronto-based Manulife Financial Corp. for $277 million, a 73% jump.
The $117 million difference made it No. 10 on CommercialCafe’s listing, the only California office deal to make the list.
Manulife bought the 20-story tower a few blocks from John Wayne Airport at the Park Place mixed-use campus for about $517 per square foot, a high-water mark at the time for airport-area offices in Irvine.
The tower was built just before the last recession and originally was to hold defunct subprime mortgage company New Century Financial Corp. as an anchor tenant, circumstances that led to the low price Emmes paid for it.
Manulife, best known in the U.S. for its John Hancock Life Insurance Co. division, likely thinks it still got a deal, based on the direction of area office prices since the transaction
The Michelson has been rolled into a Manulife-overseen real estate investment trust that’s traded on the Singapore Stock Exchange. Last year’s listing on the SGX had the Manulife US REIT valued at $317.8 million; that had risen to $342 million as of this past June, a 23% increase.
Local market watchers could argue that Emmes’ flip isn’t even the best investment made at Park Place in recent years.
That distinction would go to Irvine-based LBA Realty, which bought the bulk of Park Place’s office, retail and excess land, but not the Michelson tower, in a series of deals in 2009 and 2010, when former owner Maguire was trying to get its finances under control.
LBA has sold large chunks of land at the campus for apartment and hotel development in deals valued at far more than $150 million.
It’s also brought in two institutional investors in the past two years to buy large stakes of its office and retail portion of the campus for nearly $800 million, or more than four times what it’s believed it paid for the entire campus.
Emmes has its sights on another profitable office deal in the airport area. In April it paid almost $200 million to buy two 12-story buildings at 1920 and 2010 Main St. that are part of are of the 48-acre Irvine Concourse development.
South Coast Metro Sale
A shopping center across the street from South Coast Plaza is up for sale.
The nearly 166,000-square-foot Bristol Center in Santa Ana that’s home to a CVS, Buffalo Wild Wings, Chipotle and Chick-fil-A, among other tenants, was recently listed for sale by CBRE Group Inc.’s National Retail Partners West brokerage team in Newport Beach.
The 97%-leased center near the intersection of Bristol Street and Sunflower Avenue has an asking price of $49.8 million, or about $300 per square foot, for a year-one cap rate of 7.8%, according to CBRE.
Food tenants bring in sales as high as $1,200 per square foot in some instances, according to marketing materials.
Bristol Center is currently owned by a local family trust, property records show.
