A foreign-based investor has bought 11 buildings in a Newport Beach office park close to John Wayne Airport in one of the larger office transactions in the city so far this year.
The buildings make up a majority of The Hangars Newport Beach office complex, an 18-building, low-rise complex partly on Birch Street, between Dove and Quail streets.
The for-lease buildings that traded hands total about 174,000 square feet. Specific pricing for the transaction was not disclosed, but the properties are believed to have sold for more than $30 million, or roughly $180 per square foot.
The entire Hangars complex totals about 272,000 square feet; other buildings there are individually owned by owner-users and other investors.
Companies that call the office complex home include homebuilder City Ventures Inc., as well as a variety of medical, design and other professional services tenants.
Property records show an Alta Loma-based LLC with foreign ties buying the portfolio, while an investment group headed by Newport Beach-based Greenlaw Partners sold the buildings.
Brokers who worked on the deal for the Newport Beach office of CBRE Inc. described the buyer as a “high-net-worth individual,” but declined to provide specifics.
State records and other local reports show an investor with Egyptian ties holding the same address as the buyer.
Other purchases the buyer is reported to have made include a San Juan Capistrano office that traded hands late last year for about $19.5 million, as well as a shopping center in Chino Hills purchased a few years ago.
The buyer took out a $15 million loan that is due at the end of 2017 to finance the Hangars purchase, according to property records.
Foreign Investors
More deals in Orange County involving foreign investors are expected later this year, according to Anthony DeLorenzo, a broker with the investment properties group of CBRE who represented the buyer in the Hangars transaction.
“The story here is that more (foreign) buyers are looking at properties here as a long-term hold and are buying real estate in core markets,” said DeLorenzo, who worked on the sale with colleagues Gary Stache and Pat Scruggs.
DeLorenzo’s brokerage team also has the listing for 8 Corporate Park, a three-story, 47,274-square-foot office just off Jamboree Road in Irvine.
A bulk of the interest for that multitenant office—which is expected to sell at a price of more than $12 million—has been from overseas investors, he said.
“We’re seeing expectations (for returns in investments) that are different for foreign investors than U.S. investors,” DeLorenzo said.
Foreign buyers are more interested in capital preservation right now and see OC as relatively affordable for commercial real estate purchases compared with markets such as San Francisco or Los Angeles, he said.
The new owner of the 11 Hangars buildings plans to keep the properties as for-rent units and is expected to do some work to upgrade the properties.
Individual buildings trading hands at the complex run from about 10,000 square feet to 20,000 square feet. The 11 buildings that traded hands are said to be about 50% occupied.
Second Big Sale
The transaction marks the second large sale of an airport-area collection of offices by Greenlaw Partners and its investment partners.
The real estate investor sold a 10-acre Irvine office site approximately a mile away from the Hangars site about a month ago.
That five-building property, about a block from Jamboree Road along Campus Drive, is reported to have sold for more than $55 million.
An affiliate of San Diego-based apartment owner Garden Communities of California bought the Irvine buildings and is under contract to buy an adjacent property also owned by Greenlaw and its partners. It plans to turn the site into an apartment complex.
Greenlaw and Chicago-based Walton Street Capital LLC completed a large acquisition last month for the City Plaza tower in Orange. The 19-story building sold for about $56 million, according to regulatory filings.
