Irvine Company is nearing a purchase of Costa Mesa’s Pacific Arts Plaza, according to real estate sources.
A deal to buy the office complex, next to the San Diego (I-405) Freeway on Anton Boulevard, is “imminent” and could be announced within a week or two, according to sources familiar with the deal.
Terms of the deal haven’t been disclosed. It’s expected to be in the $200 million or higher range. If it trades hands around that price, it would be the largest sale of an Orange County office complex in close to three years.
It also would be the first office property that Newport Beach-based Irvine Co.—the county’s largest landlord and dominant real estate company—would own in the glitzy business and arts district around Costa Mesa’s South Coast Plaza.
An Irvine Co. spokeswoman declined to “speculate on market rumor.”
Real estate watchers say it’s essentially a done deal. Irvine Co.’s office team has been meeting with existing tenants and is said to be exploring new leases at the eight-building complex, which totals 787,000 square feet of office and retail space.
The complex was about 80% leased at the end of 2009.
Officials with Rutan & Tucker LLP, the county’s second largest law firm by attorney count and the most prominent tenant at the complex, said they’re looking forward to the expected change in ownership.
“We met with representatives with Irvine Co. last week,” said Ski Harrison, Rutan’s managing partner. “They checked in to address any concerns we might have—it was a good meeting.”
“We’re happy to have them as a landlord,” Harrison added.
Rutan, which leases about 112,000 square feet of space at 611 Anton Blvd., explored relocating to an office built by Irvine Co. in the Irvine Spectrum about four years ago. It ended up staying in Costa Mesa, where it’s been since 1981.
The Pacific Arts Plaza complex has been operating out of receivership since March.
The property’s last owner was Los Angeles-based Maguire Properties Inc., which now goes by MPG Office Trust Inc. It bought the complex in 2005.
Maguire defaulted on loans for the property and several other OC buildings in September 2009. It had a $270 million loan—which works out to about $343 of debt per square foot—tied to Pacific Arts Plaza, according to regulatory filings.
The local office of Jones Lang LaSalle Inc. took over receivership of the buildings this year. Tenants said they haven’t seen many changes in day-to-day operations in the past year.
Four of the eight buildings at Pacific Arts Plaza are offices, while the others hold restaurants, including Mastro’s Steakhouse, Jerry’s Famous Deli and T.G.I. Friday’s.
Tenants at the complex paid about $14 million in rent there last year, according to filings with the Securities and Exchange Commission.
Irvine Co. isn’t the first investor speculated to have made a bid for the complex.
About two months ago, real estate watchers pointed to a unit of San Diego-based American Assets Inc. as the most likely buyer. Trade publications expected the buildings to sell for about $210 million, or about $250 per square foot, at the time.
A month later, that deal was reported dead. It’s unknown whether Irvine Co. would be buying the complex at a discount to the previously reported price.
Irvine Co. appears to be ready to buy in OC markets new to its portfolio following several years where it sat on the sidelines in terms of purchasing commercial buildings.
Last month, the company bought the Archstone Gateway apartment complex in Orange. The 884-unit complex, built a few years ago in the Platinum Triangle area around Angel Stadium of Anaheim, is believed to have traded hands for more than $230 million.
The complex, which now goes by The Gateway, is the first property in Orange or Anaheim that Irvine Co. has bought.
The buys come a few months after Irvine Co. made changes to its executive management team, putting investment properties group President Rick Gilchrist—a former president at Maguire Properties—in a new role heading up acquisitions.
A deal for Pacific Arts Plaza would be the first office deal in the area around South Coast Plaza for Irvine Co.
The company made its first move into the area about two years ago when it built an 890-unit apartment complex along Anton Boulevard and Sakioka Drive, called The Enclave.
Another apartment project could move ahead if the Pacific Arts Plaza deal is completed as expected.
The complex includes about 468,000 square feet of developable space, according to regulatory filings.
Apartments, stores, or more office space are potential options for the site, sources said.