Lincoln Property Sells 3-Building Office Asset in Orange County for $94M

Nearly three years after acquiring One Pacific Plaza through a receivership sale, Lincoln Property Co. and GEM Realty Capital have sold the three-building, Class A, Orange County office property to Prudential Real Estate Investors for $94 million.

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Nearly three years after acquiring One Pacific Plaza through a receivership sale, Lincoln Property Co.  and GEM Realty Capital have sold the three-building, Class A, Orange County, Calif., office property to Prudential Real Estate Investors for $93.6 million.

The trophy property in Huntington Beach, Calif., has a 12-story main tower and two six-story buildings with 384,303 square feet of rentable space.

The partners acquired One Pacific Plaza in October 2011 through a receivership sale and made significant upgrades, including remodeling the lobby, elevators and updating common areas. Outdoor courtyard areas were also created.

“This was a strategic acquisition of a ‘broken’ and distressed asset that we were able to stabilize in less than three years,” Kevin Hayes, Lincoln Property senior vice president, said in a news release. “We focused on driving premium lease rates in a location-driven market, which required a nuanced understanding of our leverage in each situation. We accomplished this while addressing significant deferred maintenance and upgrading the property to solidify its status as a Class A asset.”

During the past three years, Lincoln increased occupancy from 60 percent to more than 80 percent by leasing 205,000 square feet. About 120,000 square feet came from new and expansion leases, according to the company. The property now has more than 40 local and national tenants, including the national headquarters of the BJ’s Restaurants chain. Other large tenants are Health Net of California and Managed Health Network, Inc.

Lincoln Property will continue as the property manager. The Dallas-based company is a privately owned firm involved in real estate investment, development, property management and leasing worldwide. As a developer, the company has produced more than 100 million square feet of commercial space and more than 209,000 multi-family units. Last month, Lincoln Property and partner NVRetail held a groundbreaking for The Reserve at Tinner Hill in Falls Church, Va., a five-story building that will have 224 upscale apartments and 46,000 square feet of retail. The firm has also been tapped to master plan, develop and lease the new Dallas Cowboys World Headquarters in Frisco, Texas.

One Pacific Plaza wasn’t the only California office asset Lincoln Property has sold recently. The firm said in early April that an affiliate of Blackstone had bought Griffin Towers, two 12-story office towers in Santa Ana, Calif., that it owned with Angelo, Gordon & Co., for $129 million.

PREI announced in November that it was planning on acquiring office and multi-family investments for its $430 million U.S. Property Fund V. The real estate fund is managed on behalf of German investors and focuses on office investments in premium locations like Manhattan, Washington, D.C., Boston and Los Angeles as well as other ‘next tier’ markets. It is also making some investments in apartments in infill, high-growth markets. Other California office investments made by PREI in recent years have included Rio San Diego, a 190,000-square-foot office building in the Mission Valley suburb of San Diego, and 650 California St., a 34-story, 461,000-square foot office tower in San Francisco.