An apartment-investment fund run by Addison, Texas-based Behringer Harvard Holdings LLC is approaching a funding deadline for a multifamily development in Costa Mesa, while the active investment fund itself is said to be on the sales block.
The real estate investor’s Behringer Harvard Multifamily REIT I Inc. owns about 9,300 apartments nationwide, including two sizable complexes in Orange County: Calypso Apartments and Lofts—a 177-unit complex near the Diamond Jamboree shopping center in Irvine that it bought a few years ago for about $49 million—and San Sebastian, a 134-unit complex in Laguna Woods it bought in 2009.
The non-traded REIT also has investments in a handful of development sites. Those include one in downtown Costa Mesa across the street from The Triangle, the recently renamed 200,000-square-foot entertainment center on Newport Boulevard.
Regulatory filings show the REIT made a $5 million loan last year for a 2.5-acre parcel of land at the Costa Mesa site, located at Harbor Boulevard and Bernard Street. A 113-unit apartment complex called Pacifica at Newport Plaza has been proposed for the parcel.
Behringer Harvard has an option to convert the land loan to an equity investment. It then would be responsible for funding all of the project’s development costs, according to regulatory filings.
The option period expires June 15, according to the REIT’s most recent quarterly report, which was filed in mid-May. The site’s current owner is Fairfield Residential Co. of San Diego, according to city filings.
Behringer Harvard appears willing to take on the development project, which it expects to cost about $31 million. Officials told trade publication Apartment Finance Today in April that it expected to break ground on Pacifica at Newport Plaza within a year.
The site where the three- and four-story apartment complex would go up is at the end of the Costa Mesa (55) Freeway on a block containing the Grand Newport Plaza wedding and meeting site and a 32-unit condo project. Condos once also were envisioned for the Pacifica at Newport Plaza site, now a parking lot and vacant land.
One potential monkey wrench could be the ownership status of the Behringer Harvard REIT. Investment house J.P. Morgan has been reported to be shopping the REIT, which is valued at about $2.8 billion.
JP Morgan took initial offers earlier for the REIT this month, though a decision on whether it will go forward with an outright sale—which would be among the largest commercial real estate transactions of the year—has not been made, according to trade reports.
SAA Moves
Shlemmer Algaze Associates, an interior design and architectural firm that counts a number of the area’s largest landlords as clients, has moved its OC offices from Newport Beach to an Irvine building a few blocks from John Wayne Airport.
The firm, which also operates under the SAA name, employs about 30 people in OC. It relocated to the ground floor at 18201 Von Karman Ave., one of the buildings at the Von Karman Towers office complex just off Michelson Boulevard.
SAA is leasing about 6,700 square feet at the building, which is owned by American Realty Advisors. The 18201 office, as well as the courtyard connecting the offices at the complex, have been seeing a heavy dose of upgrades in recent months.
The company had no shortage of landlords to choose from when eyeing new space. SAA works with building owners such as Transwestern, Arden Realty Inc. and Lincoln Property Co. to help design space for tenants.
Among notable projects, SAA is working with New York-based Emmes Group of Cos. to redesign part of the 4000 MacArthur office complex in Newport Beach, according to Erica Zuniga, principal managing director for the OC office.
The company also is seeing an uptick in work of late for area owner-user companies that have bought smaller-sized buildings at discounted prices, and are now looking to refurbish the space for their own use, said SAA Principal and cofounder Rick Shlemmer.
The new office’s design also partly serves as an example of what more tenants are looking for in terms of space these days, with more open space and room for collaboration and fewer individual offices.
“They want more people in less space, even the healthy companies,” Shlemmer said.
SAA was represented in its new lease by Randall Parker and Steven Card with brokerage Travers Realty, which also helped the firm open a new location last year in downtown Los Angeles, at the City National Plaza towers.
