A Chicago-based real estate investor that buys commercial properties leased to government agencies has bought the State Fund office in Santa Ana, bringing its 2016 Orange County acquisitions tally past the $120 million mark.
An affiliate of Boyd Watterson Asset Management, which buys real estate on behalf of pension funds and other institutional investors, recently closed on the purchase of the eight-story office at 1750 E. Fourth St.
The office, near the intersection of the Santa Ana (I-5) and Costa Mesa (55) freeways, is part of the Xerox Centre campus, which includes a namesake 15-story tower that’s one of the best-known office buildings in the city.
The 230,000-square-foot property was sold for about $64 million, or roughly $278 per square foot, by a venture between Houston-based Hines Interests LP and Oaktree Capital Management LP in Los Angeles, according to property records.
Hines and Oaktree, who’ve partnered to buy a number of office properties across the county over about the past six years, bought the building two years ago for a reported $40 million when it was a little under half occupied.
It’s been full since the California Department of Transportation signed a nearly 130,000-square-foot lease there this past spring in one of the largest new office leases reported in Orange County this year.
The agency, which operates as Caltrans, previously ran its local operations out of the Park Place campus in Irvine.
The other main tenant is the State Compensation Insurance Fund, the largest provider of workers’ compensation insurance in California. It sold the office to the Hines-Oaktree venture in 2014 and leased back a portion of the building under a long-term deal.
G. Ryan Smith, executive vice president with the Irvine office of JLL, brokered the sale, and JLL’s Joe Bevan, Wade Clark and Andy White represented the sellers during the recent lease-up of the Santa Ana office.
4000 Metropolitan
Boyd Watterson is one of the three largest private owners of federal property, excluding post office buildings, with nearly 4 million square feet of space under its ownership, according to a September report by the capital markets division of Colliers International.
The company’s bought about 90 government-related properties since 2010, the report said.
Much of its recent government-related investments have been through its Boyd Watterson GSA Fund, which has raised more than $500 million from investors as of midyear, according to regulatory filings.
A good portion of the firm’s investment funds appear to have been directed toward OC properties this year.
An affiliate bought the 183,000-square-foot 4000 Metropolitan Drive office in Orange. The building sits just off the Garden Grove (22) Freeway near the Outlets at Orange shopping center.
The office is nearly fully leased to government tenants, including the FBI.
Profitable Sales
The Fourth Street transaction marks the latest sale of a local Hines asset. The Houston-based real estate firm and its financial partners have sold more than $200 million worth of local property since December 2015 in a series of profitable deals.
Hines’ Newport Beach office also has been an active investor over the past year, spending more than $100 million to buy big office properties in Anaheim and Orange, and the land underneath a big property it owns in Fullerton.
The Business Journal reported last week that Hines is in line to buy the new Broadcom Ltd. under construction in Irvine. Officials with the real estate company have declined to comment on the rumored transaction, which sources say involves the offices now under construction, plus excess land at the Great Park Neighborhoods site.
