The real estate investment arm of John Hancock Life Insurance Co. has added a pair of office buildings in Newport Beach to its growing local portfolio.
John Hancock Real Estate, a division of Toronto-based Manulife Financial Corp., last week closed on the purchase of 5000 Birch St., a two-building office complex about a mile from John Wayne Airport.
The offices total 306,000 square feet and sold for $104.5 million, or about $341 per square foot.
An affiliate of Santa Monica-based Cornerstone Real Estate Advisers Inc. sold the buildings, which it had owned since 2002, according to CoStar records.
5000 Birch consists of a 10-story office and a six-story building and is a block from Jamboree Road, near the Newport Beach and Irvine city line.
The campus is one of only five office properties of its size or larger in Newport Beach that are not owned by Newport Beach-based Irvine Company, according to marketing materials from the Irvine office of brokerage HFF LP.
The building was about 79% leased as of October, according to HFF, whose Ryan Gallagher, Michael McCann, Derreck Barker and Tim Geiman worked on the deal.
Growth
The buildings’ relatively low occupancy rate—class A airport-area offices now average rates approaching 90%—and in-place rents that are about 26% below the market average means that the new owners should be able to “capitalize on significant rent growth as the leasing momentum across the Orange County office market continues to build,” HFF’s marketing material said.
Orange County is one of the fastest-growing office markets in the U.S., noted Kevin Adolphe, chief executive for Manulife’s real estate division, in a statement.
The deal brings Manulife’s three-year investment in the airport area’s office market to about $475 million.
The financial services company paid $277 million in 2012 for the 19-story Michelson tower, which is in the Park Place mixed-use campus in Irvine.
Two years later it paid a reported $94.2 million for the nearby Oracle Tower, a 12-story office at 17901 Von Karman Ave.
Manulife and its affiliates now own and manage about 9 million square feet of buildings in California, the investor said.
The 5000 Birch sale is the fourth office sale in Orange County this year to top the $100 million mark, not including portfolio sales, according to CoStar data.
A year ago, there were three such deals, while in each of 2013 and 2012 there was only one stand-alone office deal that topped the $100 million mark, according to the market tracker’s data.
Institutional investors have been behind many of the county’s larger deals this year.
Newport Beach-based Pacific Investment Management Co. partnered with Hines Interests LP in Houston this summer to buy the four-building Quintana office campus in Irvine in OC’s largest individual office sale of the year.
The 430,000-square-foot campus, which is largely empty, sold for a reported $121.5 million, or $282 per square foot. The new owners are planning a creative-office redesign of the campus, which is being branded as Intersect.
Dove St. Deal
Other notable office deals of late involving institutional investors include the sale of 1301 Dove St., a 10-story office in Newport Beach about a mile from 5000 Birch.
Madison, N.J.-based Prudential Real Estate Investors paid nearly $73 million, or about $360 per square foot, for 1301 Dove in a deal that closed in August.
Cornerstone Real Estate Advisers, which sold 5000 Birch, also has been a buyer here recently: It paid $49.4 million in August to buy Foothill Plaza, a two-building complex in Foothill Ranch.
