CBRE Investors Grabs 1 MSF Office Portfolio

CB Richard Ellis Investors is definitely in the mood for shopping and has just snapped up a three-property Class A office portfolio totaling approximately 1 million square feet for its Strategic Partners U.S. Value 5 Fund. The seller, ING Clarion, had acquired the Los Angeles, East Rutherford, N.J., and West Palm Beach assets separately in 2005 and 2006 for an aggregate $365 million. The off-market transaction was an all cash deal. Both CBRE Investors and ING Clarion are remaining mum on the subject of the portfolio’s price tag, but fund principal Mike Burrichter told CPN that “it’s been a long time since we purchased something above replacement cost.” The Los Angeles-area property, dubbed The Lexington under ING Clarion’s ownership, is located at 500 N. Brand in Glendale. Featuring 418,000 square feet, the 22-story tower (pictured) was developed in 1990. The portfolio also includes Metropolitan Center, a 422,500-square-foot, 15-story property at One Meadowlands Plaza in East Rutherford, N.J. Built in 1986, Metropolitan Center also features a 4,500 square-foot cafeteria, a 1,300-space parking facility and a fitness center. Esperante, located at 222 Lakeview Ave. in West Palm Beach, rounds out the group. Encompassing 248,000 square feet in a 17-story shell, the two-decade-old Esperante sits in the city’s Central Business District and is a leading hub for tenants in the legal and financial services sectors. CBRE Investors will upgrade the portfolio, which has an average occupancy rate of about 74 percent, through a broad capital program that, among other accomplishments, will leave all three buildings with LEED certification. With the economy in a tailspin and the credit market in an inhospitable holding pattern, many office property investors are sitting back, waiting for the storm to pass. But such is not the case for CBRE Investors. “Eventually there will be recovery in every market, so our strategy is to buy high-quality, distressed, or less than stabilized, Class A assets in major markets,” Burrichter said. “It’s no secret that 2009 is going to be tough, and we’ve taken that into consideration in our offers. But the message is we’re off the sidelines and have the capital and are ready to use it.” Selling properties, however, is not on the agenda. “We tested the market with a couple of buildings and didn’t like the pricing,” Burrichter said. “It’s not a pleasant time to be a seller. Owners are only selling if they have to.”