A deep-pocketed Boston-based real estate investor has bought five offices in Aliso Viejo in what looks to be the priciest commercial property transaction in Orange County so far this year.
Real estate investor Rockpoint Group LLC, reported to have nearly $10 billion in real estate-related assets under management, recently completed the buy of the multitenant buildings at Summit Office Campus.
The buildings, at 65, 75, 85, 95 and 101 Enterprise, are next to the San Joaquin Hills (73) Toll Road near Town Center at Aliso Viejo shopping center and the Renaissance Club Sport hotel and fitness center. They total 479,451 square feet, about a quarter of the office space at the Summit, which has the most office square footage in the city.
The offices were owned by affiliates of San Francisco-based global investment adviser RREEF Funds LLC, which acquired them about 14 years ago, according to property records.
A sales price wasn’t immediately disclosed by the parties involved or by broker representatives. Real estate sources familiar with the transaction said they traded hands for more than $150 million, or at least $312 per square foot.
That would be the largest local office transaction since the $443 million sale of the recently built four-building Five Point Gateway campus in Irvine nine months ago.
The top office deal of the year prior to the Summit transaction was the $147.3 million trade of City Tower in Orange, which was bought in March by an affiliate of Newport Beach-based KBS Realty Advisors.
The Rockpoint-RREEF deal was brokered by the local capital markets team of Newmark Knight Frank. The firm also worked on the sale of the 20-story City Tower, which sold for about $341 per square foot.
Blackstone Ties
The buy is Rockpoint’s first outright acquisition in OC. It focuses on buying office, multifamily and hospitality properties in coastal markets, and apparently has plenty of cash to fund other area deals.
The investor, whose West Coast operations are in San Francisco, said it and predecessor companies have raised nearly $19 billion in capital commitments since 1994.
Rockpoint announced in March that a fund overseen by New York-based private equity giant Blackstone Group LP had taken a roughly 20% stake in the firm on undisclosed terms.
With offices in other large West Coast markets, including Silicon Valley, San Francisco and Los Angeles, still more expensive to buy than those in OC by square foot, and projections of more area office rental increases, the Summit portfolio drew its share of interest, in particular large out-of-area investors, said Newmark Executive Managing Director Paul Jones.
The OC investment “provided the buyer with an institutionally built, managed and maintained office project in the heart of the amenity-rich, master-planned community of Aliso Viejo, as well as greater South Orange County,” said Jones, who worked on the deal with colleagues Kevin Shannon, Brunson Howard, Ken White, Rick Stumm and Blake Bokosky.
The new owners plan to overhaul the properties, according to Jones.
“Rockpoint intends to undergo a heavy reposition and rebranding on this asset in order to push market rents, drive leasing velocity and create a very unique office campus like nothing else in the submarket,” he said.
The offices include three, three-story buildings and two four-story buildings. They’re on about 21 acres and were built between 1998 and 2000, some of the oldest buildings at the built-out campus, whose last structure, a 205,479-square-foot office built for MicroVention Inc., opened last year.
The buildings Rockpoint bought were 79% leased at the time, a below-average occupancy rate for offices in Aliso Viejo. The city’s 3.3 million square feet of office space was about 84% occupied as of March, according to area brokerage data.
Tenants at the Rockpoint offices include TechSpace, NuVasive Inc., Pacific World Corp., and Microsoft Corp.
Rockpoint is buying into an office market that’s had its share of change over about the past 18 months.
One of Aliso Viejo’s largest tenants, QLogic Corp., sold its campus there last year and moved to the Irvine Spectrum. Its former three-building campus, which totals 161,000 square feet, is being redeveloped by Newport Beach-based Stillwater Investment Group and is available for lease.
Two other notable area companies, Lennar Corp. and FivePoint Communities Inc., plan to move from other buildings at the Summit to Irvine’s Five Point Gateway this year.
New entries in the area’s office market include medical device maker MicroVention, whose local operations had been in Tustin, and Concerto Healthcare, which moved early this year from Irvine to Rockpoint’s 85 Enterprise, where it leases about 29,000 square feet, according to CoStar Group Inc. data.
