Knobbe Martens, Orange County’s largest law firm by local attorney count, is selling the 14-story office tower that holds its Irvine headquarters to the two top executives of Corona-based Monster Beverage Corp., the Business Journal has learned.
The law firm’s 2040 Main Street building, part of the Irvine Concourse office campus near John Wayne Airport, is expected to sell for nearly $130 million later this month, sources tell the Business Journal.
It will be the largest single-building office sale of the year in Orange County.
The 324,955-square-foot tower should sell for about $400 per square foot, one of the higher per-square-foot prices seen of late for an OC tower outside Newport Beach.
2040 Main is being bought by Hilrod Holdings, a private real estate investment firm owned and controlled by Monster Beverage’s Rodney Sacks and Hilton Schlosberg.
The duo—each estimated by the Business Journal to have a fortune in the $3 billion range—own a number of high-end offices in and around the airport area; the OC residents have spent more than $500 million over the past five years buying area buildings as personal investments.
The 2040 Main purchase will be their most expensive reported area office deal.
Knobbe Martens will lease-back more than half the building from the new owners under a long-term deal, according to sources.
The firm did not respond for comment on the transaction.
2004 Investment
The tower is about 94% leased, and the building’s sale is being handled by Jeffrey Cole, Rick Ellison and Ed Hernandez from the Irvine office of Cushman & Wakefield, according to real estate sources.
In addition to Knobbe Martens, tenants at the building include accounting firm Moss Adams LLP and Terra Tech Corp. (OTC: TRTC), a cannabis-focused agriculture company.
Knobbe Martens bought the building for a reported $106.6 million in 2004, two years after it was built.
The intellectual property and technology firm, founded by the late Don Martens and Louis Knobbe, is the largest local law firm with about 154 area attorneys, according to Business Journal’s list in March. It had about 125 area lawyers in 2004 when it bought the building, two years after relocating from Newport Center.
Monster Beverage (Nasdaq: MNST), which has a $31.5 billion valuation, is among the firm’s roster of local clients.
The law firm is expected to sign a long-term lease-back for about 55% of the building in a deal expected to run about 15 years, sources said.
Pricing Increase
2040 Main is part of the 48-acre Irvine Concourse development running along Main Street, between Von Karman Avenue and MacArthur Boulevard.
The 10-building campus has numerous office towers, as well as a pair of hotels and an Equinox Sports Club. Most of the buildings in the complex are owned by different investment groups.
The last towers there to sell, the 1920 and 2010 Main Street buildings, traded hands in 2017 for about $325 per square foot. New York’s Emmes Group of Cos. was the buyer.
Monthly rental rates for the 2040 Main property are in the $3 to $3.25 per square foot range, according to brokerage data.
$500M and Counting
Sacks serves as chairman and chief executive of Monster Beverage, and Schlosberg is president and chief operating officer. They have a 9% and 8.8% ownership stake, respectively, in the maker of energy drinks and other products.
The company was known as Hansen Natural Corp. and based in Anaheim when they acquired it in 1992.
The duo have been among the most active local investors in recent years, acquiring office properties in Orange, Yorba Linda, Santa Ana, Lake Forest, Irvine, and Newport Beach. The Irvine capital markets team of Cushman & Wakefield has worked on several of those deals.
Hilrod’s portfolio ranks among the area’s largest for private investors of commercial real estate.
Its last big reported purchase was in 2017, when it paid some $58 million for Newport Beach’s nine-story 4400 MacArthur Boulevard building.
That deal was done in a venture with Irvine’s Greenlaw Partners, one of the area’s most active commercial real estate investors and developers; Hilrod and Greenlaw have also worked on several buys at the Von Karman Towers office complex, a short walk from the Irvine Concourse campus.
The 2211 Michelson building, part of Von Karman Towers, was put up for sale earlier this year by Los Angeles-based Kilroy Realty; Hilrod and Greenlaw are seen as potential bidders for that 12-story tower.
TriCentre Tower Sold
Hilrod Holdings isn’t just a buyer these days: It just unloaded one of its local office properties, a rare move for the real estate investment firm headed by Corona-based Monster Beverage Corp.’s top two executives, Rodney Sacks and Hilton Schlosberg.
The company last week disclosed the sale of the TriCentre office tower in Orange, a 212,000-square-foot office near the intersection of the 5, 22, and 57 freeways.
The 10-story office sold for $44.3 million, or about $209 per square foot.
Hilrod and Irvine-based PRES Cos. paid a reported $41.5 million for the tower four years ago.
It’s the first known sale for Hilrod over that time.
The office, situated at 333 S. Anita Drive to the east of the Santa Ana River, was 80% leased at the time of sale.
The largest tenants currently at the building are MegaMex Foods LLC and Farmers Insurance, according to broker materials.
Stanton Road Capital LLC is the building’s new owner.
The El Segundo-based real estate investor, whose portfolio is largely based in Los Angeles and Texas, is planning about $5 million in capital improvements for the building, according to sources familiar with the deal.
Other OC properties it has bought of late include the Offices at Village Business Park, a 10.5-acre, two-building office property in Buena Park.
Jeffrey Cole, Jeff Chiate, Rick Ellison, Ed Hernandez, and Nico Napolitano from Cushman & Wakefield’s Orange County office brokered the TriCentre deal on behalf of Hilrod; John Harty and Jason Ward from the firm will handle leasing on behalf of Stanton.
“The new ownership will benefit by implementing a modernization plan that will significantly boost achievable rental rates in a submarket where rates have increased over 22% over the past 24 months,” Cole said in a statement.
