Reports from Chicago suggest that Irvine Company is looking to grow its office portfolio in the Windy City.
The Newport Beach-based real estate developer and investor is said to be near a deal to buy a stake in the UBS Tower, a 51-story skyscraper in downtown Chicago, according to a report last week in Crain’s Chicago Business.
The proposed deal for the 1.4-million-square-foot building, located at One North Wacker Drive, comes about nine months after Irvine Co. closed on the buy of another Chicago skyscraper, the 48-story Hyatt Center office building.
The Hyatt Center acquisition, for a reported $625 million, was the first-ever office deal outside California for Irvine Co., Orange County’s dominant real estate company.
The bulk of Irvine Co.’s roughly 480-building office portfolio is located here, with other portions spread over Los Angeles, San Diego and the Silicon Valley.
The sale of the UBS Tower, located about a block from the 1.5-million-square-foot Hyatt Center office in Chicago’s West Loop area, was not confirmed at the time the Business Journal went to press.
No Comment
Irvine Co. officials declined to comment on any deal or Crain’s Chicago report.
If the deal gets completed as reported, it would appear to mark a change in strategy for Irvine Co., or an exception to its standard practices. The company, to date, has bought office buildings and other properties outright.
Crain’s Chicago is reporting that Irvine Co. is buying a 50% stake in the UBS Tower, which currently is owned by an investment fund of Houston-based Hines Interests LP.
Irvine Co. would pay Hines about $310 million for the 50% stake in the tower, according to reports. That would make it the company’s most expensive buy so far this year.
A subsidiary of Hines’ U.S. Core Office Fund LP reportedly paid $540 million for the entire tower in April 2008.
Hines’ History
While Irvine Co. isn’t big on joint ventures, Hines has a history of bringing in partners in development and investment deals.
In Orange County, Hines joined with Crescent Real Estate Equities LP of Fort Worth, Texas, to build the 2211 Michelson office building in Irvine a few years ago.
Last month, Hines partnered with Los Angeles-based Oaktree Capital Manage-ment LP to buy Alton Corporate Plaza, a two-building office park in Irvine.
Hines and Irvine Co. aren’t known to have partnered in any other property deals. The closest tie between the two companies appears to be personnel-related.
The president of Irvine Co.’s office properties division, Doug Holte, previously was a longtime executive with Hines and ran its OC operations.
The reported deal in Chicago works out to a sale price of about $440 per square foot for the UBS Tower. Irvine Co. paid nearly $420 per square foot for the Hyatt Center.
High-end offices near John Wayne Airport in Orange County tend to sell closer to $350 per square foot.
A deal for the UBS Tower would only be the latest in a series of Chicago skyscraper investments by OC-based investors, with many of those transactions counting ties to Hines.
Others From OC
Newport Beach-based KBS Realty Advisors LLC—whose executive team includes Peter Bren, the brother of Irvine Co. Chairman Donald Bren—last year bought 300 N. LaSalle Drive, a 60-story tower built in 2009 by Hines.
That deal, for about $655 million, is likely the priciest office buy any Orange County real estate company has ever made.
Olen Properties Corp. of Newport Beach paid $350 million in 2006 for a 40-story skyscraper at One S. Dearborn Ave. in Chicago. The 828,538-square-foot building—which, like the North LaSalle tower, was built and sold by Hines—traded hands for $422 per square foot.
Olen’s purchase had set the high-water mark for a Chicago tower sale on a per-square-foot basis until the KBS deal last year for 300 N. LaSalle, which sold for about $503 per square foot.
