One Pacific Plaza in Huntington Beach has sold, in what area brokers are calling Orange County’s first notable lender-facilitated office sale in the wake of the pandemic.
Sources indicate a family office affiliated with Joe Wen, the founder of multinational conglomerate Formosa Ltd., paid roughly $42 million for the approximately 394,000-square-foot office campus along the San Diego (405) freeway in Huntington Beach, next to the Bella Terra shopping center.
The price is a far cry from the property’s prior 2018 sale, in which a venture including Irvine-based Pendulum Property Partners paid $124.5 million, or nearly $315 per square foot.
The new price works out to about $107 per square foot, marking a 66% valuation decline.
The prior lender for the office campus also took a hit on the transaction, with more than $90 million in debt remaining on the property.
Wen, a Newport Beach resident, appears to be taking a bet that the downturned office market will turn around; the recent Surf City buy marks the second reported value-add play for the entrepreneur and philanthropist this year, trailing a $25 million South Coast Metro office acquisition in February.
Eastdil Secured represented the seller in the deal; Wen was unrepresented.
Debt Deal
Pendulum partnered with an affiliate of Los Angeles-based Ares Management Corp. (NYSE: ARES), a global alternative asset manager with over $300 billion of assets under management, on the 2018 deal.
They financed the purchase with a $97 million loan from SunTrust Bank, property records indicate.
The owners had been working with SunTrust to sell the asset and recoup property losses suffered in the wake of the pandemic, sources tell the Business Journal.
“The deal is the first sizable institutional office to come on the market in a lender facilitated deal,” Paul Jones, executive managing director of brokerage Newmark, previously told the Business Journal.
Wen is expected to maintain the campus as an office property and work on lease-up efforts—the property was roughly 70% leased at the time of sale.
One Pacific Plaza includes one 12-story tower and two six-story buildings totaling about 394,000 square feet.
The largest building at 7755 Center Ave. totals 199,253 square feet and is the headquarters of BJ’s Restaurants (Nasdaq: BJRI), which occupies some 56,000 square feet.
Other campus tenants include finance and insurance firm Confie, which takes about 25,000 square feet for its headquarters at 7711 Center Ave. Irvine-based Alliant Insurance Services Inc. acquired Confie in 2021.
New Owner
The sale adds to Wen’s collection of local commercial real estate holdings, with a recent focus on discounted office deals.
Wen’s $25 million February purchase of 4 Hutton Centre, a 217,000-square-foot office tower that’s part of the 46-acre Hutton Centre mixed-use complex at the corner of MacArthur Boulevard and the Costa Mesa (55) Freeway, marked a 54% discount to the building’s prior 2019 sale.
Wen immigrated to the U.S. from Taiwan as a teen and made his fortune through Formosa, a multinational conglomerate based overseas but with several local commercial real estate holdings in Costa Mesa and Foothill Ranch.
Wen is also the founder and chief executive of Sakura Paper Inc., a Cypress-based division of Formosa that makes and distributes a range of sustainable paper products.
Wen owns the former Foothill Ranch headquarters of mortgage lender loanDepot Inc. (NYSE: LSI), and is reportedly looking to offload that asset, which was bought in 2017 for a reported $40 million.
He’s perhaps best known locally for the sprawling mansion he built in Newport Coast. The 55,000-square-foot Villa de Formosa is one of the largest single-family homes in America.
Last June, Wen and his family donated $20 million to the University of California, Irvine for a forthcoming outpatient clinical facility at the new UCI Health-Irvine medical complex going up along Jamboree Road. It was said to be the largest gift to UCI Health by a donor under age 50.
Recent Office Deals
There’s been several examples of falling office prices across OC of late.
Costa Mesa’s Canvas office campus sold in July for $92.5 million, among the largest office sales in the county in the past two years but still below its pre-pandemic valuations.
Chicago-based EQ Office acquired the campus in two separate deals totaling $102.8 million in 2013 and 2015; it then invested nearly $30 million in improvements to overhaul the traditional offices into a creative office hub.
When considering the total $132.8 million that EQ invested in the asset, the recent sale marks a 30% price tag discount for the new owner, Ontario-based MGR Real Estate.
The Michelson office tower in Irvine, a 19-story trophy property at 3161 Michelson Drive, about a mile from John Wayne Airport, was once valued as much as $345 million.
As of June, that estimated valuation has been cut nearly 26% to $256 million, according to recent investor filings from the building’s owner, Manulife US REIT.
Sources tell the Business Journal a notable building in the Irvine Concourse is expected to trade soon at a large discount.
AEW Capital Management is nearing a deal to sell 2050 Main St., a 314,074-square-foot office building at the intersection of MacArthur Boulevard and Main Street.
AEW paid $108.5 million for the property in 2011.
