The largest Orange County industrial portfolio to trade hands at the peak of the last commercial real estate boom reportedly might see a change in ownership, as debt tied to the buildings matures.
New York-based private equity firm Blackstone Group LP is said to be negotiating to take ownership of about $2 billion in industrial properties, including OC properties once valued at more than $400 million.
Chicago-based Walton Street Capital LLC bought the West Coast-focused assets in 2007 as part of a $2.8 billion deal for industrial properties previously owned by CalWest Industrial Holdings LLC. The sale included about 3.3 million square feet of local warehouse and business park properties and turned Walton Street into one of OC’s biggest industrial landlords.
The OC portfolio included 19 properties, totaling about 118 buildings.
Most of the local buildings trading hands in that deal were in Santa Ana, Garden Grove, Anaheim, Irvine and Tustin.
Business parks changing hands included the 208,200-square-foot Garden Grove Business Center, the 192,000-square-foot Harbor Business Park in Santa Ana, and the 226,000-square-foot Spectrum Centre Business Park in Lake Forest.
Warehouses that sold included a 202,000-square-foot property in Fullerton at 1425 Acacia and the 245,000-square-foot Tower Park property in Anaheim. The deal also included more than 2 million square feet of industrial space in Los Angeles.
Debt tied to the 2007 sale was due to mature on June 8, Bloomberg reported last week.
The value of the buildings likely has dropped about 30% since the sale, making the 23-million-square-foot portfolio’s value less than the loan totals, the report said.
Walton Street’s deal was financed with $1.1 billion of senior debt and $1.35 billion of mezzanine loans. Blackstone has bought most of the mezzanine debt at discounted prices during the past few years, putting it in a position to wrest control of the portfolio if Walton Street defaults on its loans, according to the wire service.
—Mark Mueller
