Irvine-based real estate investor LBA Realty is considered the likely buyer for the largest portion of Kilroy Realty Corp.’s 3.4 million-square-foot Orange County industrial portfolio, according to real estate sources.
Kilroy, an L.A.-based landlord with more than 12 million square feet of West Coast office properties, put its industrial portfolio up for sale earlier this year. The portfolio includes 39 buildings—a mix of warehouses, business parks and light industrial buildings that are all in OC. A bulk of the portfolio is in Anaheim, Brea and Garden Grove, along with a few buildings further south.
Kilroy officials said last week the company has reached agreements to sell the industrial properties, and expects the deals to close by year’s end.
TIAA-CREF
Executives, speaking to analysts after the company’s release of third-quarter financial results, didn’t identify buyers of the properties but said the buildings would be sold in two parts. Real estate sources not directly involved in the sale point to LBA Realty and New York-based financial services firm TIAA-CREF as the two buyers of the properties.
TIAA-CREF—short for Teachers Insurance and Annuity Association–College Retirement Equities Fund—is expected to buy about nine or 10 higher-end industrial buildings, mostly located in Anaheim and Brea. The properties are said to total about 1 million square feet.
LBA is expected to purchase the remainder of the portfolio.
Park Place
LBA is best known locally for it ownership of the bulk of the 105-acre Park Place office campus in Irvine, near John Wayne Airport.
Such a deal would represent the most notable local purchase by LBA since it snapped up its Park Place portfolio in transactions with Maguire Properties Inc. in 2009 and 2010.
The company owns and operates about 40 million square feet of office, industrial and retail space across the Western U.S. Its current industrial portfolio in OC totals seven buildings, according to the company’s website.
Kilroy officials said last week they expected to see about $355 million in proceeds from the industrial sale. That works out to an average of $104 per square foot. TIAA-CREF is expected to be paying a higher per-square foot price for its buildings than LBA, according to sources.
Anaheim Office
Kilroy also has a 43,000-square-foot office in Anaheim for sale, along with a trio of offices it owns in Ventura County.
It’s unknown if LBA or TIAA-CREF plan to buy those properties.
Kilroy’s OC industrial portfolio includes about 15 warehouses totaling more than 2 million square feet, 14 light industrial buildings totaling about 800,000 square feet, and 10 business parks totaling more than 400,000 square feet.
Prominent buildings in the portfolio include the roughly 200,000-square-foot headquarters for Anaheim-based Targus Group International Inc., one of the country’s largest makers of bags for laptop computers(see related story, page 1).
QSC
Also part of the portfolio is a 51,000-square-foot building in Costa Mesa that’s home to QSC Audio Products LLC, a maker of amplifiers, speakers and sound systems.
The portfolio’s space is 93% leased, with monthly rents averaging 57 cents per square foot, according to Kilroy’s most recent annual report.
