Centerstone Plaza, a six-building office and retail complex in Irvine, has traded hands for about $51 million in the latest sizable sale of an Orange County commercial property to a large institutional investor.
New York Life Real Estate Investors this month closed on the purchase of the 159,880-square-foot property at the intersection of Barranca Parkway and Culver Drive.
The complex traded hands for about $318 per square foot in a deal brokered by the Newport Beach office of Newmark Grubb Knight Frank.
Centerstone Plaza was sold by Blackstone Group LP’s Chicago-based office division, Equity Office Management LLC.
The property includes four, two-story office buildings and two free-standing restaurants, an Islands Restaurant and a Mimi’s Café.
St. Joseph Hospital is the primary occupant of one of the four office buildings. Other tenants at the 25-year-old complex include First Team Real Estate, executive suite operator Premier Business Centers and Tarbell Realtors.
A number of Centerstone Plaza’s tenants have been there since its opening, according to Robert Griffith, executive managing director for the capital markets division of NGKF.
The complex across the street from The Crossroads shopping center is 96% full, according to brokerage data.
It is the first notable OC purchase in several years for the New York-based buyer, which is a division of New York Life Investments. Other area properties it owns include 1500 Quail, an 86,000-square-foot office near John Wayne Airport in Newport Beach.
New York Life’s real estate division reportedly manages more than $35 billion in client assets through a variety of commercial mortgages, direct equity investments and other real estate related products. It invests on behalf of third-party institutional investors and New York Life.
The new owner plans to keep NGKF’s Greg May, John Scruggs and Andrew Robben on board as leasing brokers for the property.
The deal adds to a string of large area office purchases in the second half of the year by some of the country’s larger institutional investors.
Seven office deals in excess of $50 million have been completed since July, one of the busier stretches of investment sales not featuring distressed properties that OC’s office market has seen in years. All but one of those deals has involved nonlocal, institutional buyers.
Other Investors
Other active institutional investors here have included AEW Capital Management LP, Cornerstone Real Estate Advisors Inc., Goldman Sachs Asset Management, Griffin Capital Corp. and Praedium Group LLC.
Institutional investors “are looking for
stable, secure investments,” and Centerstone Plaza fits the bill with a long history of
being close to fully occupied, said NGKF’s May, who serves as managing director
of Orange County operations for the brokerage.
OC offices also continue to appeal to institutional investors due to lower pricing than in many parts of Los Angeles and San Diego, May said.
Equity’s Local Buys
The sale of Centerstone Plaza adds to a string of local transactions—both purchases and dispositions—for Equity Office, which operates as the office division of private equity giant Blackstone Group.
Equity Office has spent about $180 million on local office buys since June, including October’s $75 million purchase of South Coast Corporate Center in Costa Mesa. The property is a three-building complex near the South Coast Plaza shopping center.
It also sold the 300,000-square-foot Fountain Valley City Centre office campus to MemorialCare Health System in an August deal valued at about $67 million.
Blackstone took over Centerstone Plaza in 2011, along with more than two dozen other properties across the U.S. that totaled about 2.8 million square feet.
The portfolio was previously owned by Glenborough Realty Trust, which was acquired by a unit of Morgan Stanley in 2006 in a deal worth $1.9 billion.
Blackstone owned debt tied to the 2006 deal and took over the portfolio after Morgan Stanley opted not to repay about $820 million in loans that were coming due.
Blackstone sold another OC property that was part of that Morgan Stanley portfolio—895 Dove St. in Newport Beach—in August. Goldman Sachs bought the building for $38.8 million.
