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Newport Beach’s Irvine Company, Orange County’s largest office landlord, is trying to get the word out to brokers that it’s the most financially stable building owner in town.
A letter sent out by the company’s office properties division, which oversees a local portfolio of some 16 million square feet of space, recently unveiled a new commission program for brokers called Ready Check.
Under the program, Irvine Co. said it will begin paying brokers their full commissions within 48 hours of getting an office lease signed with the landlord.
During a normal market, Irvine Co. and other large landlords typically pay 50% of a commission at the time a deal is signed. The other half is paid once tenant improvement work is completed on the office and the tenant moves in to the property.
For larger deals, that could mean a broker has to wait three to four months for his or her second paycheck, sources note. That’s dicey these days as landlords’ and tenants’ financial situations can change by the month.
Since the downturn, the timing of commission payments has become harder to gauge, particularly among some of the more distressed owners in the area. Several sources cited problems with brokers getting paid for deals signed at Opus West’s 2050 Main Street as a result of the developer filing for bankruptcy.
Those problems are said to have been resolved at the recently-built 2050 Main Street building, which is in the process of being sold.
Irvine Co.’s Ready Check was created in part as a response to nervousness among brokers about “some office landlords’ ability to pay commissions,” said Steve Case, Irvine Co. executive vice president, in a letter to brokers.
“While uncertainty and concern may exist in certain areas of the commercial real estate business, (Irvine Co.’s) one of the financially strongest real estate companies in the United States,” Case’s letter said.
The Irvine Co. is hoping that virtual commission guarantee will entice brokers to bring their clients to Irvine Co. buildings.
With brokers already working without compensation for a year or more on some deals until they’re closed, it’s a smart move for the Irvine Co. to promise a quick payment, said Randall Parker, managing director for the Newport Beach office of Los Angeles-based brokerage Travers Realty Corp.
“It further separates them from their competition,” Parker said.
The program has a few provisions, according to Irvine Co.’s letter. The brokers’ client must be deemed a credit tenant and all the required documentation needs to be received, including a fully executed lease and approved commission invoice. Also, the plan doesn’t include the sec-
ond installments of previously executed deals.
Thompson Deals
A retail-focused real estate investment trust overseen by Irvine’s Thompson National Properties LLC has completed its first acquisition.
Thompson’s TNP Strategic Retail Trust Inc. filed its initial registration statement about a year ago, and it hopes to raise more than $1 billion to buy shopping centers in the Western U.S.
Its first acquisition, completed in November, is a 94,574-square-foot retail center in Moreno Valley. The center’s anchored by a Stater Bros. grocery store.
Terms of the deal weren’t disclosed. The trust also has agreed to buy a 170,275-square-foot retail center in Hawaii, but it hasn’t closed on the transaction, according to the company, which also recently landed a $15 million credit facility with KeyBank National Association.
A condominium project in Anaheim originally slated to open in mid-2007 is hoping to ramp up sales in December following a big auction of homes there.
Beverly Hills-based auctioneer Kennedy Wilson Inc. will be selling off 54 condos on Dec. 13 for Anaheim’s Harbor Lofts on the Promenade development, on Center Street Promenade next to Anaheim Ice, an ice skating rink.
The 129-condo project was built by a venture of Lee Homes Inc. of Los Angeles and master developer CIM Group Inc. of Los Angeles. The lofts there range from 1,035 square feet to 2,452 square feet. The project also includes 18 two-story townhomes.
The condo and retail project, which began construction in 2006, was billed as the first mixed-use development in Anaheim’s downtown, and the first residents originally were expected to move in by the summer of 2007. That date was pushed back as the housing market soured.
The auctioneer is billing December’s sales event as the project’s “Grand Reopening.”
The homes are being sold by the developers, according to Kennedy Wilson officials.
Kennedy Wilson’s auction, being held at the Anaheim Marriott, lists starting bids at just $165,000 on 2-bedroom lofts and $210,000 on 3-bedroom lofts. Those condos previously were priced at $350,000 for the 2-bedroom lofts and $540,000 for the 3-bedroom ones, according to the auctioneer.
