Irvine Company has bought a 13-story office building in San Diego County’s Mission Valley and paid off nearly $86 million in debt on a property in nearby La Jolla.
The Newport Beach-based real estate investor and developer recently closed on the buy of Centerside One in Mission Valley, a nearly 205,000-square-foot office located near Qualcomm Stadium.
The glass-clad building, located at 3111 Camino del Rio North, is part of a two-building office complex.
Irvine Co. already owned the other building at the complex, a 16-story, 287,000-square-foot building at 3131 Camino del Rio North that operates under the Centerside II name.
Ownership of both offices should make it easier for Irvine Co. to brand and market the property, or make any upgrades to the campus, according to officials familiar with the sale.
The sale “made sense from an operational as well as strategic standpoint,” said Doug Holte, president of Irvine Co. Office Properties.
Centerside One was sold by New York-based pension fund TIAA–CREF, which had owned the building since 2004.
Terms of the sale weren’t disclosed. TIAA-CREF valued the building at about $46 million, according to a quarterly report filed by the pension fund in May.
90% Leased
The building is about 90% leased and averages monthly rents of $1.65 per square foot, according to regulatory filings.
The Centerside One deal is believed to be among the most expensive office sales seen in San Diego County in 2012. It’s also the latest notable acquisition outside Orange County for Irvine Co., OC’s dominant landlord.
The Business Journal last week reported that the developer bought a 439,000-square-foot office campus in San Jose in a deal estimated to be worth about $130 million.
Irvine Co. owns about close to 7.6 million square feet of office space in San Diego County, its largest office market outside OC, and counts nearly another 3 million square feet of buildings in Silicon Valley. It owns about 30 million square feet of space in Orange County.
The Centerside properties are the only Mission Valley offices that Irvine Co. owns, although the company also has apartments in the area.
The bulk of Irvine Co.’ offices in San Diego County are located downtown and in University Town Center, a suburban market near La Jolla.
Irvine Co. also recently paid off a loan tied to another building it bought in 2007, Northern Trust Tower in La Jolla.
Irvine Co. acquired the 10-story, 189,000-square-foot Northern Trust office tower for a reported $103 million. It was part of a 17-office portfolio of buildings formerly owned by Equity Office Properties Trust that the company bought from Blackstone Group LP, for nearly $1 billion.
The purchase of the Northern Trust building, located at 4370 La Jolla Village Drive, was funded in part with a $94.5 million loan, reportedly from Bank of America.
KBS
An affiliate of Newport Beach-based real estate investor KBS Realty Advisors bought the promissory note for just $57.4 million in late 2008. KBS also bought a secondary note tied to the building—originally valued at $10.3 million—for $2 million last month.
KBS’ chairman and president is Peter Bren, the younger brother of Irvine Co. chairman Donald Bren.
KBS late last month said it entered into a discounted payoff agreement with an affiliate of Irvine Co. for the two notes tied to the La Jolla office for a combined $85.8 million.
KBS said it made a gain of $24.8 million on the sale after closing costs.
