Top 10 Orange County Office Investors in 2018
- Feb 25, 2019
While transaction volume fell across the country in 2018, Orange County experienced a strong year in the office sector, with total volume exceeding $2.2 billion, an increase over the year prior. Roughly 8.2 million square feet changed hands, with the largest share of purchases occurring in the John Wayne Airport submarket, with the overall majority of properties transacted being Class B assets.
The transactions overwhelmingly were concentrated in the hands of a few buyers—roughly 57 percent of investment dollars came from only 10 firms. Similar to the market’s trends, more Class B traded than Class A properties, though Class A assets fetched approximately $75 per square foot higher prices. Meanwhile, value-add potential has been the main investment driver in most metros last year, as investors look to improved yields at a time when prices are high. The table below highlights the top 10 office investors across Orange County in 2018, according to data from Yardi Matrix.
5. Granite Properties
Granite Properties made the list with a single transaction—the second-highest single-building acquisition in Orange County in 2018—through its purchase of 100 Bayview from AEW Capital Management. The 317,153-square-foot Class A asset changed hands for $125.7 million, or $396.18 per square foot.
The six-story building, constructed in 1991, is situated in the John Wayne Airport submarket alongside the Corona Del Mar Freeway. The area has a number of other Class A office assets in the area—approximately 2.3 million square feet across nine properties. Tenants at 100 Bayview include RiverRock Real Estate Group, Clearlight Partners and LDC Advisors.
Last year’s acquisition nearly doubles Granite Properties’ holdings in the market, now totaling 690,928 square feet. The firm also owns the three buildings in Orange City Square, 10 miles north. CBRE Global Investors traded those properties for a total of $81.6 million in 2012.
4. KBS Realty Advisors
The firm’s $147.3 million acquisition of the 435,177-square-foot City Tower in March was Orange County’s highest-dollar single acquisition in 2018. Clarion Partners sold the property, with BBVA Compass Bank providing $103.4 million in financing to KBS.
The 20-story, LEED Gold certified high-rise opened in 1988 and is home to a varied tenant mix, which includes Regus and Alliance Funding Group along with a mix of law and medical firms. Clarion Partners renovated the asset between 2015 and 2017, and KBS plans to invest further in capital improvements.
KBS Realty has long been active in Orange County, both as a buyer and a seller. The firm presently owns one other office property in the market—the 100,461-square-foot Von Karman Tech—located 10 miles southeast of City Tower in Irvine. KBS purchased the asset from HighBrook in 2015 for $21.5 million.
3. Kelemen Caamano Investments
Kelemen Caamano closed 2018 with two major Orange County acquisitions. In the largest transaction, the firm paid Barings $106.8 million for the 293,622-square-foot Atrium in Irvine. Kelemen also acquired the five-building, 167,000-square-foot Corporate Pointe from PS Business Parks in a $41.7 million deal in March.
The 10-story Atrium opened in 1986 and is 4.6 percent vacant, with CBRE assigned to oversee leasing efforts. The tower, most recently renovated in 2015 by the previous owner, contains approximately 10,000 square feet of retail space and benefits from an attached parking structure.
Kelemen’s holdings across the market additionally include 15501 Red Hill Ave., a 44,123-square-foot property in Tustin. The company has made a total of 11 acquisitions and eight sales in Orange County since 2014.
2. Rockpoint Group
Rockpoint Group entered the Orange County market last year with its $157 million acquisition of five buildings at the Summit Office Campus in Aliso Viejo from RREEF Property Trust. The assets total 483,641 square feet. The seller had purchased the properties in 2004 from the State Teachers Retirement System of Ohio. The portfolio has a weighted vacancy of 21 percent.
While Rockpoint may be new to Orange County, the firm owns roughly 12 million square feet of office across the country, with more than half of its holdings concentrated in or near Washington, D.C., Boston and Manhattan. The company has continued to expand its national footprint, with major office acquisitions in San Francisco, Austin and Los Angeles in the past two years.
1. Angelo, Gordon & Co.
Angelo Gordon was the largest buyer in 2018 across Orange County, with its $200 million acquisition of an eight-building Class B portfolio containing 533,060 square feet from EQ Office. PCCP provided $128 million in financing for the buyer. The seller had purchased the properties out of foreclosure from AIG in May 2013 for $105.5 million.
In the portfolio, five of the buildings are located in the John Wayne Airport submarket, with the three others in the Irvine Business Complex. The assets have a weighted vacancy of 16.5 percent. Lincoln Property Co., a joint venture partner in the acquisition, is handling management at all the properties. The owner selected CBRE to oversee leasing operations.
In addition to the Orange County acquisitions, Angelo Gordon acquired more than 1.3 million square feet in several other markets, including Chicago, the Bay Area and San Diego. The firm’s current holdings include upwards of 21 million square feet across nearly 70 properties.