Newport Beach-based real estate developer and owner Greenlaw Partners is looking to add one of the county’s most distinctive properties—the Crystal Cathedral in Garden Grove—to a portfolio that’s grown with acquisitions of distressed buildings in the past two years,
Greenlaw has agreed to pay $46 million for Crystal Cathedral Ministries’ iconic glass church and surrounding office buildings, according to court documents filed late last month with a federal bankruptcy court in Santa Ana.
The seven buildings on the campus total about 329,000 square feet, including close to 140,000 square feet of offices.
The office space is used by the church and could be leased to other tenants in a few years, according to court filings.
The proposed sale price works out to about $140 per square feet for the entire property, which was built in 1980.
If completed at the current price, it would be the largest sale of a North Orange County commercial property so far this year.
The proposal calls for Greenlaw to lease back the cathedral and other parts of the 30-acre property to the church, which uses the campus for services, ministries and its “Hour of Power” television show.
The sale and leaseback is seen by leaders of the church—founded by Rev. Robert Schuller in 1955—as the best way to dig its way out of debt.
Crystal Cathedral Ministries, considered by many to be the country’s first modern megachurch, listed more than $40 million in debts when it filed for bankruptcy protection in October.
Ministry officials cited the economy and dwindling contributions as the reasons behind the filing.
Terms
Initially, the church would pay more than $300,000 a month to lease back the bulk of the campus from Greenlaw, under a 15-year deal.
Payments would decrease to $212,000 per month after two years, assuming Greenlaw decides to seek other tenants for the office portion of the campus, which appears likely.
The developer has had success leasing up another office it recently acquired near the Crystal Cathedral campus—4000 Metropolitan Ave., next to the Block at Orange shopping center.
Greenlaw recently struck a nearly 100,000-square-foot lease with the Federal Bureau of Investigation for the 4000 Metropolitan building, according to sources. That’s one of the larger office leases signed so far this year.
The FBI’s local operations had been based in Santa Ana.
In addition to its office uses, the Crystal Cathedral sale also includes a development play. Greenlaw could build up to 400 apartments and a parking structure on the church campus, according to court filings.
The deal with Greenlaw is far from being finalized, according to sources familiar with the bankruptcy case.
Greenlaw signed a letter of intent to buy the property on May 23.
A higher bid could come in a court-overseen auction, sources said.
In a best-case scenario, Greenlaw’s deal could close by August.
Officials for the developer declined to comment on the prospects of the sale gaining bankruptcy court approval.
The deal would be among the highest-profile properties owned by Greenlaw, which also is a part owner of Costa Mesa’s Triangle Square shopping center, and has several local offices in its expanding portfolio.
Greenlaw has bought close to $200 million worth of commercial properties since the end of 2009, primarily office buildings.
Many of those buildings have been acquired in partnerships with two big private equity firms, New York-based Westbrook Partners LLC and Chicago’s Walton Street Capital LLC.
There’s no mention in court filings of any potential financial partners with Greenlaw in the Crystal Cathedral sale.
• THE NEWS:
Greenlaw Partners bids $46 million for Crystal Cathedral Ministries 30-acre, seven-building campus
• BACKGROUND:
The church filed for bankruptcy last October, listing more than $40 million in debts
• WHAT’S AHEAD:
Deal would allow the church to lease back space, open possibility for Greenlaw to build apartments on the site
Other Greenlaw Deals
Notable deals Greenlaw has made of late include Irvine’s 2050 Main Street, a 13-story office tower built near the peak of the last real estate boom near John Wayne Airport.
The company and its partners paid close to $56 million for the then-largely empty building in late 2009, after the building’s developers went bankrupt.
Following a number of big leases that have brought its occupancy levels close to full, including a recent deal with Sunwest Bank, the 2050 Main building’s now likely worth close to $100 million, based on similar sales of late.
Greenlaw’s recent office deal in Orange appears to have given it the confidence to go ahead with the nearby Crystal Cathedral.
Near the end of 2010, Greenlaw paid about $11.5 million for 4000 Metropolitan, a four story office just off the Garden Grove (22) Freeway.
The 183,500-square-foot office reportedly traded hands for about $63 per square foot in a lender-driven sale, according to brokerage data from the Irvine office of Colliers International. Wells Fargo & Co. was reported to be the seller.
An affiliate of Los Angeles-based West Millennium Homes, which filed for bankruptcy in 2009, paid close to $38 million for the building in 2006.
The 4000 Metropolitan building was reported to be about a third leased at the time of its bank-overseen sale, according to brokerage data.
Following the recently struck 100,000-square-foot deal with the FBI and another 46,900-square-foot lease with Santa Ana-based T.D. Service Financial Corp., the building’s now said to be close to full.
T.D. Service, founded by Dale Dykema, helps lenders process paperwork for foreclosed homes.
