An empty, high-profile industrial building in Irvine previously used by St. John Knits International Inc. for the bulk of its local operations has seen a change in ownership.
Affiliates of New York-based insurer American International Group Inc. have taken over 2722 Michelson Drive, a 170,466-square-foot property at the intersection of Jamboree Road, just off the San Diego (I-405) Freeway.
The property, located a few blocks from John Wayne Airport, has been sitting empty since earlier this year, when Irvine-based St. John Knits, a high-end clothing maker for women, opted to consolidate its local operations into a few other local properties.
The new owner’s near-term plan is to lease the building to either one or multiple tenants.
The local office of Dallas-based Lincoln Property Co. is acting as asset manager and property manager for the building, while Irvine-based brokerage 360 Commercial Part-ners has the listing for the property.
The building is now immediately available for lease, said Kevin Hayes, senior vice president for the Southern California office of Lincoln Property.
The new owners will be putting money into the property for upgrades, he said.
The property can be configured to hold a tenant as small as 60,000 square feet, and includes office space that could serve as a tenant’s headquarters facility, according to 360 Commercial Managing Partner Louis Toma-selli.
In Process
The brokerage is in the process of figuring out the asking lease rates for the property, he said.
In 2006, St. John Knits sold the facility to Houston-based developer Hines Interests LP and pension fund California Public Employ-ees Retirement System. St. John then inked a five-year deal to lease back a portion of the facility.
Terms of the 2006 sale weren’t disclosed. The property was assessed at a value of nearly $48 million in 2007, according to data from Costar Group Inc. It was valued at $30 million last year.
AIG affiliates owned a loan tied to the property and took over ownership of 2722 Michelson building through foreclosure, according to Hayes.
Financial terms of the foreclosure transaction, which took place earlier this month, were not immediately available through court records.
It’s the second notable foreclosure-related transaction that affiliates of AIG—which was bailed out by the government in 2008 in the midst of the financial crisis—have made in Orange County this year.
Portfolio
Earlier this year, AIG affiliates took over ownership of an 11-building portfolio of midsize offices in Newport Beach, Irvine and Seal Beach. Those properties had also last traded hands near the peak of the market.
AIG paid a combined $175 million through credit bids for those office buildings, which comprise five complexes and about 812,000 square feet. That price was about 70% of the properties’ combined debt, according to Orange County Superior Court records.
Lincoln Property, which also owns several large office complexes in Huntington Beach and Santa Ana, also is acting as asset manager and property manager for those AIG-owned buildings.
The recent change in ownership for the 2722 Michelson building would appear to throw a monkey wrench into a major office development plan eyed for that stretch of Jamboree Road.
Hines and financial partner CalPERS also own the remainder of the land on the same block of the former St. John building, along Jamboree Road from Michelson Drive to Teller Road. That land is believed to be debt-free and is not in financial distress.
Other older industrial buildings on that block—which previously held tenants including a medical device unit of Tyco Inter-national Ltd., as well as Linksys Inc., a maker of home networking routers—have been razed in the past few years.
Hines and CalPERS have proposed a project called California Green, a 705,500-square-foot office campus, for that land. The first phase of the development was to include the already-razed land, while a second phase would call for the demolition of the St. John building.
It’s unclear what the change in ownership for the St. John building means in terms of the second phase of the proposed development.
Officials from Hines were not available for comment.
