Nobody from LBA Realty is on this week’s list of OC’s Wealthiest, but the firm’s purchase of the Park Place office and retail campus in Irvine during the last downturn might turn out to be the most profitable commercial real estate deal here in a years.
The Irvine-based real estate investor just inked St. Joseph Health to a nearly 200,000-square-foot lease for office space at Park Place, the sprawling campus located just off the San Diego (405) Freeway and Jamboree Road. It’s by far the largest new office lease signed in Orange County so far this year, according to brokerage data.
The deal also is the latest in a string of headline-making deals at Park Place for LBA—which acquired a majority of the nearly 105-acre campus at what looks to be a steep discount to its current value—in a series of transactions in 2009 and 2010.
St. Joseph will be taking over most of the space at the 3345 Michelson building, a 232,000-square-foot building that’s part of the futuristic-looking, low-rise office complex at Park Place.
The 12-year lease for St. Joseph, an Orange-based hospital operator, is set to commence early next year, according to LBA officials.
About 900 area employees, primarily those now working in Orange and Anaheim, will be consolidated into the Irvine location, St. Joseph officials said last week.
St. Joseph owns St. Joseph Hospital in Orange, Fullerton-based St. Jude Medical Center and Mission Hospital, which has campuses in Mission Viejo and Laguna Beach. It also has hospitals in other parts of California, and one in Texas. It currently has administrative offices in several locations in OC.
The moves aim to add efficiency to the company’s operations, while keeping offices in the heart of Orange County, according to Susan Solomon, vice president of marketing and communications at St. Joseph.
Employees moving to Irvine will include those in the company’s revenue cycle services department and its wellness group, Solomon said.
St. Joseph is the latest leasing coup at Park Place for LBA, which has signed close to 700,000 square feet of new leases there since taking over the property.
Western Digital
It landed Western Digital Corp. as an anchor tenant for the low-rise office portion of campus in a 2009 deal that has since been expanded to about 470,000 square feet. The disk drive maker moved its headquarters from Lake Forest to Irvine as part of the relocation.
The landlord has also embarked on a substantial renovation of its portion of the 2.5 million square foot campus over the past year—said to be in the range of about $40 million—upgrading both office and retail buildings as well as the landscaping of the campus.
Other new additions include LA Fitness, which is in the early stages of building a new, 45,000-square-foot flagship gym that’s expected to open next year.
The Irvine-based fitness operator earlier this year announced a deal to move its headquarters to the Michelson office tower at the campus—one of the few buildings at Park Place, along with a pair of condo towers, that LBA doesn’t own.
Land dealings at Park Place have also proven to be profitable moves for LBA.
An unused 14-acre portion of land at the southern edge of the campus was sold off late last year to Newport Beach-based Irvine Company, which is planning a 980-unit apartment complex set to open in 2014.
The land traded hands for a reported $101.4 million, with LBA reportedly receiving a large portion of the proceeds from the sale.
LBA bought Park Place through a series of distressed real estate transactions involving the site’s former owner, Maguire Properties Inc. The deals in 2009 and 2010 relieved the Los Angeles-based landlord, now operating under the MPG Office Trust name, of having to pay close to $270 million in debt that was tied to the buildings.
Upside
Terms of the transactions weren’t disclosed, but LBA is believed to have bought the properties at a fraction of that amount.
LBA could eventually see the value of its investment more than double in price following the leases and upgrades to the property, according to real estate sources.
