IN-DEPTH: Lincoln Property sells office complex for $129m
Lincoln Property Co. and partner Angelo, Gordon & Co. have sold Griffin Towers, a class A trophy office complex in Santa Ana, Calif. Here’s an in-depth look of the deal.
THE DEAL
The joint venture sold the twin building office project to Equity Office, an affiliate of The Blackstone Group, for $129 million, or $236 per square foot. CBRE represented the seller, and Blackstone was self-represented.
The property sale represents the largest commercial transaction in Orange County so far this year.
A $57.6 million loan was assumed from a $62 million first mortgage financed by the New York State Teachers’ Retirement System in March 2010.
THE ASSET
Griffin Towers is situated on seven acres at 5 and 6 Hutton Centre Drive in the master-planned MacArthur Place development. The 12-story plus penthouse office buildings total 549,940 rentable square feet and include an adjacent six-story above-ground parking garage, a retail arcade featuring the newly opened Griffin Grill, a circular driveway plaza, and a dramatic three-story granite atrium lobby.
The property is 88 percent occupied. The buildings’ largest tenants include Corinthian Colleges, CH2M Hill, Ultimate Software and Premier Business Centers.
The Lincoln Property joint venture bought the asset for $89.9 million. Since acquiring the property in March 2010, Lincoln Property completed an extensive lobby upgrade along with improvements to common area corridors, elevators and the conference center. During the past four years, the Lincoln Property team also installed new landscaping, updated seating areas, renovated the onsite café and redeployed a dormant co-generation plant that now produces approximately 77 percent of the buildings’ power onsite.
THE MARKET
Transaction activity in Orange County office sector declined in the first quarter compared to fourth quarter 2013 but is showing consistent investor activity, according to data by Real Capital Analytics. First quarter 2014 closed with 20 transactions totaling $444.7 million in sales price. Fourth quarter 2013 had $671 million in sales volume, and approximately $481 million in transactions changed hands during third quarter 2013.
Blackstone has been the top buyer of Orange County office assets in the past two years, acquiring 11 properties for $476.4 million in sales price. Another asset Blackstone has acquired this year was Fountain Valley Plaza, located in Fountain Valley, Calif., from SL Green Realty Corp. for $22.3 million.
THE PLAYERS
Lincoln Property Co. is a privately owned real estate firm involved in real estate investment, development, property management and leasing worldwide.
Angelo Gordon & Co. is an American alternative investment manager focused on making distressed investments and a hedge fund sponsor.
Equity Office is an affiliate of The Blackstone Group. The company was acquired by Blackstone in 2007 in the largest public-to-private transaction in the REIT world. The firm owns 70 million square feet of office space across the United States.
