Chicago-based Equity Office Management LLC has taken over a four-property office portfolio in Irvine and Newport Beach in the largest office sale seen in Orange County so far this year.
The office landlord, a unit of New York-based private equity giant Blackstone Group LP, said the company’s Blackstone Real Estate Partners VII fund paid $105 million for the mid-rise and low-rise office properties, which total eight buildings in the area around John Wayne Airport.
The sale works out to a price of nearly $200 per square foot for the buildings, which combine for a little more than 521,000 square feet.
The properties were sold by affiliates of New York-based insurer American International Group Inc.
AIG paid about $175 million in a foreclosure-driven deal in 2011 for the eight buildings and a three-building office complex in Seal Beach.
AIG sold the 297,241-square-foot Seal Beach property, known as the Bixby Office Park, in February to San Diego-based Parallel Capital Partners Inc. for $85 million. That had been OC’s priciest reported office sale of the year.
Blackstone Buildings
Buildings sold to Blackstone in the latest transaction include two properties in Newport Beach and an additional two in Irvine.
The Newport Beach buildings include Redstone Plaza, a two-building office project near the intersection of MacArthur Boulevard and Dove Street that totals 171,173 square feet, and 1201 Dove St., a nearby six-story office property totaling 82,006 square feet.
The Irvine properties include Inwood Park, a three-building, three-story office campus that runs 160,683 square feet, and Newport Summit, which holds a pair of three-story office buildings totaling 107,371 square feet.
Equity Office will manage the properties and has named two brokerage firms to handle leasing.
CBRE Group Inc. is the leasing agent for Redstone Plaza and 1201 Dove St., represented by the leasing team of Dean Chandler, Jeff Morgan, John Weiner and Justin Hill.
Newport Summit and Inwood Park will be leased by James Estrada and Jay Nugent of Jones Lang LaSalle.
Notable Return
The deal marks a notable return to the Airport Area for Equity Office, which was OC’s second-largest office landlord in early 2007 before cashing out on its local portfolio near the peak of the last commercial real estate cycle.
The company, previously known as Equity Office Properties Trust, had owned about 6 million square feet of offices in OC before its national portfolio was bought by Blackstone in early 2007 in a blockbuster $39 billion deal.
Blackstone quickly sold Equity Office’s OC office portfolio, as well as buildings in Los Angeles, to L.A.-based Maguire Properties Inc. in a $2.9 billion deal.
Maguire later in 2007 sold the eight-building portfolio changing hands this month, along with the recently sold Seal Beach property, for about $345 million.
Buyers
The buyers in that deal were a venture of Irvine’s Bixby Land Co. and Mercantile Real Estate Advisors Inc., a pension fund adviser that now operates as PNC Realty Investors Inc.
That ownership group defaulted on its loans in 2010, and affiliates of AIG took over ownership of the buildings in 2011.
This month’s purchase expands Equity Office’s Southern California presence to 17 million square feet, the company said.
Equity Office’s OC portfolio now runs about 1.2 million square feet; it took over about a half-dozen area offices, primarily in Fountain Valley, late last year as part of a larger transaction in Southern California involving 4.5 million square feet of buildings.
This month’s deal “is part of our investment strategy to acquire quality assets throughout Southern California and offer our customers more options for their office space needs,” Frank Campbell, Equity Office’s managing director for Southern California, said in statement.
“The Orange County office market continues to strengthen, with excellent long-term growth potential,” Campbell said. “We believe this is a great time to capitalize on our management and leasing expertise to improve the performance of these assets.”
Blackstone represented itself in the transaction, and Eastdil Secured represented AIG.
