HFF Orchestrates Sale, Financing in Orange County
- Dec 14, 2016
Brea, Calif.—Commercial real estate and capital markets services provider HFF recently worked overtime in Orange County, Calif., securing both a buyer and financing for a 291,000-square-foot office portfolio in Brea.
Acting on behalf of The PRES Cos. and Mariner Real Estate Management, HFF orchestrated the $55.6 million sale of Brea Corporate Plaza and Brea Park Centre to a new partnership of JCR Capital and PRES, and secured a $39 million acquisition loan for the buyer.
The four-property portfolio garnered its share of attention on the market. “We had various groups looking at the offering,” Ryan Gallagher, senior managing director with HFF, told Commercial Property Executive. “Brea has historically been a strong performing low beta market in Orange County with a very central location.”
Brea Corporate Plaza, built in 1983, is a 119,000-square-foot structure carrying the address of 3230 Imperial Hwy. Completed in 1980, Break Park Center comprises the portfolio’s remaining three buildings: 500 S. Kraemer Blvd., 2601 Saturn St. and 2650 Imperial Hwy., which feature approximately 95,000, 50,000 and 27,000 square feet, respectively. Together, the four Brea properties have an average occupancy level of 85 percent in an area that provides upside potential through rising rents. In the third quarter, the average asking rental rate in Brea was $2.15 per square foot, marking the highest asking rate in the North County submarket, per a report by commercial real estate services firm Voit Co.
HFF arranged the financing for Brea Corporate and Brea Park through Prime Finance, landing a three-year, floating-rate loan with the option for two 12-month extensions. PRES and partner JCR, which supplied the majority of the equity capital for the portfolio acquisition, plan to use a portion of the loan proceeds to support leasing costs and capital improvements at the office buildings.
For JCR and PRES, the Brea portfolio constitutes the partnership’s inaugural purchase. The companies plan to put their newly acquired properties back on the market for sale as individual assets over the next few years. And PRES will continue its partnership with Mariner, as well. If the joint ventures plan to boost their holdings in Orange County, they’ll have to contend with a notable amount of competition. “We are still seeing a significant appetite from investors and we expect that sentiment to continue into 2017,” Gallagher said. According to the Voit report, the sales volume in Orange County has been on a consistent upswing since 2008.