Oxford Renews Southland Push
Oxford Properties, an offshoot of one of the many Canadian giants that marched south before the recession to develop real estate and then, in the past few months, appeared to retreat, is gearing up for a second assault.
The company will break ground Thursday on the $65-million Centre Pointe Plaza, an eight-story office building in Torrance, designed by Albert C. Martin & Associates, which will become the new national corporate headquarters for CCH Computax Inc.
Computax is a subsidiary of Chicago-based Commerce Clearing House, the $505-million company that provides information on federal and state tax regulations, estate and gift taxes, federal securities law and labor law to accounting and law firms and government agencies.
The 290,000-square-foot project, on a former White Front site at 21250 Hawthorne Blvd., is Oxford’s first since the $1.2-billion sale last year of most of its U. S. assets to Bell Canada Enterprises Development (BCED). The Torrance project, owned by Oxford and Command Development as a limited partner, is also Oxford’s first in Southern California since its 1985 completion of the first office building, a 42-story tower, at Citicorp Plaza in downtown Los Angeles.
Oxford sold the second and third phases of the planned $650-million office-retail complex to its 50% partner, Prudential Insurance of America, last July, and its interest in the first building, structured for tax purposes, will “evaporate eventually,” Oxford’s president, D. Noble Love, explained.
So why develop in Torrance when the company seemed to be pulling back?
Love, who is based in Los Angeles although the parent firm is headquartered in Toronto, explained:
“In late 1984, we looked at our U. S. portfolio and realized that a lot was under construction or in the lease-up phase. At the time, tenants were getting huge allowances--$30 to $35 a square foot,” quite an increase from the tenant allowances when the company first entered the U. S. market, with a project in Phoenix, in 1974.
“The difference would make a significant impact on the millions of square feet owned or being developed by Oxford.”
The situation was something like Cadillac Fairview’s, he suggested. Cadillac Fairview, one of Canada’s biggest real estate companies, announced earlier this month that it will be acquired by JMB Realty, a Chicago-headquartered company that owns several office buildings and the Century Plaza Hotel in Century City.
“Cadillac Fairview had a large development program under way that required large amounts of capital to keep going,” Love said. “Capital commitments to lease (its office and mixed-use projects) were significant.”
Starting Process Again
Oxford looked at its tenant allowances and tax consequences and came to a similar conclusion. “We looked at the returns and thought it might be a good time for us to start disposing of some of our real estate,” Love said.
That didn’t involve Oxford’s 8 million square feet of real estate in Canada, where the market “was not hit as severely as in the United States,” he explained.
The idea was to sell U. S. properties that could suffer from tenant allowances and tax laws and reinvest, buying sites to start the development process again. Since Oxford’s business is long term--the first Citicorp building took four years--the tenant allowance problem wouldn’t resurface for some time.
By then, there could even be some changes again in the tax laws.
Lost Name Temporarily
“We entered into about nine different transactions, but the sale to BCED was the largest,” he said.
Oxford even lost its name in the process, but only temporarily. “To simplify the sale, we structured it as a company, taking out certain properties (including Citicorp Plaza). Then we sold the stock in the company to BCED. Immediately, at closing, we got our name back.”
In the past, Oxford developed such massive projects as the 52-story IDS office tower in Minneapolis and the 56-story Republic Plaza office tower in Denver. It developed office buildings from 20,000 square feet to more than 1.5 million square feet; residential and industrial park projects, and mixed-use properties from 600,000 to more than 1.7 million square feet.
Does Love think Oxford will again develop such massive projects? “I would like to think that we could capitalize on our (divestment) move and go even further.”
Firm in Liquid Position
Because of several acquisition and disposition programs that he termed “fortunate,” Oxford finds itself in a liquid position. He considers the Torrance project as “pure development” and is excited about it, since it was 70% pre-leased by Computax in a 20-year transaction valued at more than $100 million.
He is, however, equally excited about acquiring “existing real estate where we don’t have to compete with the Japanese or institutional America, where there is some risk--like inherent design or circulation flaws--where we can use our experience and expertise, where we can step in and be involved in redeveloping an asset for value enhancement.”
He’s looking in Los Angeles, where Oxford’s U. S. headquarters will be maintained, but he’s also looking at cities like Dallas, which has suffered recently from cutbacks in the oil industry.
In the meantime, Oxford is getting ready to develop a project the size of Citicorp Plaza in Louisville, Ky.
