A 128,000-square-foot office project next to the Costa Mesa (55) Freeway in Santa Ana has changed hands for about $16 million.
A partnership between Rialto Capital Management LLC of Miami and San Diego-based Cypress Office Properties LLC bought the two-building Freeway Corporate Park.
Crown Realty & Development Inc. in Irvine sold the project, which it had owned for about eight years.
The sale price works out to about $125 per square foot.
Freeway Corporate Park includes a 76,516-square-foot office at East Carnegie Avenue and a 51,750-square-foot office at 2501 Pullman St. The complex is a few blocks west of the edge of the Tustin Legacy development site and is considered to be part of the Irvine Business Complex submarket.
The project is about 86% leased to four tenants. Iteris Inc., a maker of sensors and other traffic gear, moved its headquarters from Anaheim to the Carnegie Avenue building in 2007 and leases more than 50,000 square feet at the complex.
Orange County Head Start Inc., the local affiliate of one of the country’s largest child development programs, has its headquarters in the Pullman Street office, where it leases more than 25,000 square feet.
“The existing tenant roster, coupled with an improving Orange County real estate market, made Freeway Corporate Park a compelling investment,” said Mike Farley, a director for Rialto Capital, a real estate investment division of Miami-based homebuilder Lennar Corp.
Other recent local office investments by Rialto include 2929 Imperial, a two-story office on East Imperial Highway in Brea that was previously known as Saturn Business Park.
Last year Rialto Capital paid about $10.8 million for the 121,000-square-foot Brea office in a venture with Irvine-based Koll Co. It recently inked IMS Co., a maker of portable in-flight entertainment players and related software, to an 81,000-square-foot lease at the building.
Cypress Office Properties was formed in 2009 and has bought a handful of other OC offices since then, including Orangethorpe Corporate Plaza in Anaheim and the Anaheim Crossroads office campus.
It sold the 103,168-square-foot Anaheim Crossroads complex last year for a reported $6.8 million after paying $5 million for it the prior year.
Similiar Opportunity
Freeway Corporate Park offers the new buyers a similar investment opportunity, according to Paul Jones, a vice president for CBRE Group Inc.’s investment property group who represented Crown Realty in the sale along with colleague Bob Smith. CBRE will serve as property manager for the buildings.
There’s been a “lack of available value-add product in Orange County over the last several months,” Jones said. “This offering allowed the buyer to purchase at an attractive price per square foot with good in-place short-term yield and further potential upside from tenant retention.”
Cypress Office principals Ron Lack and Mark Wayne said they will oversee the operations of the just-bought property.
Upgrade, Rebrand
“Our plan is to upgrade and rebrand the property immediately, which will benefit the existing project occupants and help fill current vacant space,” Lack said.
Colliers International’s Matt Didier will provide marketing and leasing services for the new ownership.
The office is believed to have been one of the last remaining offices in the OC portfolio of Crown Realty, an office, retail and resort developer whose best-known property in the region is the 1.2-million-square-foot Burbank Town Center.
The company is still believed to own land in Santa Ana next to the Xerox Centre office tower, where a second office has long been proposed.
