County Had 11 of 25 Biggest Deals in Southland Real Estate Last Year
Eleven of the 25 biggest real estate deals in Southern California last year occurred in Orange County, according to a San Diego market-research firm.
The number of local deals, led by the $83-million sale of two Newport Center office buildings, exceeded by three the eight sales in Los Angeles County, COMPS Inc. reported. But the Los Angeles deals involved more money.
The Orange County sales added up to $511 million, or 36% of the $1.4-billion total, COMPS said. The eight Los Angeles deals totaled $656 million, or 46%.
The Orange County transactions included four office and retail projects, four land parcels and three apartment complexes.
The statistics underscored the county’s active real estate market last year and the rising cost of real estate, especially the cost of land for new residential housing developments.
“Our clients were looking at land prices and saying, ‘If I buy this, I’ll never be able to build something for a price I could sell it at,’ ” said S. Kelly McDermott, vice president of Market Profiles, a Costa Mesa market-research firm. He added:
“But then they’d say, ‘If I don’t buy it, somebody else will.’ So they bought it and built the houses and behold--the houses sold at what would have been unbelievable prices just a little while before.”
It was also a year in which there were some fairly big purchases of office buildings, although the 1988 buyers, unlike those in 1987’s bigger deals, were not Japanese.
“There was much broader interest in Orange County office buildings than there has been in the past,” said Scott Perley, a vice president of the commercial real estate brokerage of Cushman & Wakefield of California Inc.
“The buying wasn’t a lot more aggressive, but a lot of people were looking because office-leasing activity is still strong,” he explained.
Also high on the 1988 list were apartment complexes. Investors believe that high home prices will keep many residents renting and that the county’s booming economy will attract plenty of new residents to fill the complexes. The problem is that hardly anybody is selling, so prices remain high even though renter demand shows signs of softening.
The two biggest transactions of 1988 were both in Los Angeles: the sales of the Fox Plaza for $320 million and the Sanwa Bank building for $88 million.
The 11 Orange County deals follow, listed according to size.
- The sale of the two office buildings at Newport Center in Newport Beach ranked third on the Southern California list. Pacific Mutual Life Insurance Co. sold the office buildings and a restaurant for $83 million--$309 per square foot--to the California State Teachers Retirement System. The sale was believed to have set a record for the highest price per square foot paid for offices in Orange County. The transaction did not include the insurance company’s headquarters building nearby.
- Three office buildings known as Nexus Financial Center on Parker Street in Orange were 4th on the list of 25. The buyer was JMB Realty Trust, a Chicago real estate investment firm that has been acquiring a lot of property in Southern California. The seller, receiving $58.2 million, was Nexus Equities U.S.A., a Newport Beach developer.
- Ranking 5th was 416 acres of undeveloped land between Oso and Marguerite parkways sold by the Mission Viejo Co. to Home Capitol Corp. and its partner, Irvine home builder Barratt American Inc., for construction of up to 1,500 homes in a development called Pacific Hills. The price was $57.5 million. The Mission Viejo Co. announced in 1987 that it was getting out of the home-building business and has made several large land sales recently. This deal was believed to be one of the largest land deals in recent times in the county.
- Charter Centre, a high-rise office building and retail complex at Beach Boulevard and Warner Avenue, was sold by Mola Development Corp. for $55 million and ranked 8th. Guardian Savings & Loan Assn. was the buyer of the 3-year-old complex, housing Mola’s corporate headquarters. Although the building was 90% leased, the high price surprised some in the industry because the building is outside the bustling John Wayne Airport area. Guardian said it would move its headquarters to the office tower.
- Two office buildings and a garage on Dupont Drive in Irvine, called Dupont Centre, ranked 9th. They were sold for $51.2 million by Dupont Centre Associates, a partnership of the Canadian company BCE Development and Legacy Office Development Co. in Irvine. The buyer was USAA Real Estate Co., a subsidiary of pension-fund adviser USAA in San Antonio, Tex. With 250,000 square feet of space, the buildings sold for about $210 per square foot, about average for office deals in the county last year.
- The Mission Viejo Co. sold 161 acres off Marguerite Parkway in Mission Viejo to J.M. Peters Co. The price was $42.9 million and the transaction ranked 13th. Peters, a Newport Beach home builder, is building a $200-million, 904-unit community for the elderly called Palmia on the site, the company’s first foray into that kind of housing. Peters also had the 22nd-biggest transaction on the list, a $30.6-million purchase of 49.5 acres from Griffin Homes in Calabasas in Los Angeles County near the Ventura County line, an area of extremely expensive luxury homes that is just now being intensively developed.
- The 448-unit Casa Del Sol apartment complex on Brookhurst Avenue went for $35.3 million and ranked 18th. The seller was Matteson Investment Corp. and the buyer was Richard J. Battaglia of Huntington Beach, a 45-year-old developer of overseas amusement parks and a local real estate magnate. The deal was part of a tax-deferred transaction that included the sale of Battaglia’s 242-unit Woodlake Village apartments in La Habra.
- Ranking 19th was another land transaction: 153 acres off Avenida Pico outside San Clemente. Apartments, condominiums, a hotel and stores will be built on 90 of those acres. The area is surrounded by big housing developments. Selling the parcel for $35.2 million was the local development arm of Western Savings & Loan Assn., a troubled Phoenix thrift that owns a lot of land in the Rancho San Clemente area and has been operating under the supervision of federal regulators since last year. The buyer was a partnership called Rancho San Clemente Town Center Associates, which is half-owned by a company called Shanco Inc., which is in turn owned by Byron Tarnutzer of the Newport Beach development firm Tarnutzer Cos. The other half of Town Center Associates is owned by Hexagon Group, a subsidiary of the British clothing manufacturer Burton PLC. Tarnutzer said the land has recently been rezoned to accommodate the apartments, condos and stores.
- In 20th place was the Somerset Park apartment complex on Jefferson Avenue in Placentia. Buying for $33.2 million was the Pacific Co. Selling was Somerset Park Development.
- Ranking 21st was another piece of land bought by J.M. Peters and a partner, Canadian home builder Bramalea California Inc. in Costa Mesa. That parcel was 282 acres off Portola Parkway northeast of El Toro, planned for residential development. The price was $33 million and the seller was Foothill Ranch Co., a partnership of Hon Development Co. of Laguna Hills, said to be one of the largest landowners in the county. Peters said it plans to build 500 homes on its share of the land.
- Another apartment-complex sale ranked 25th, the Wimbledon Glen apartments on Buckingham Drive in Costa Mesa. Selling for $26.8 million was Wells Fargo Bank. The buyer was Arnel Management Co., a subsidiary of the giant Costa Mesa apartment developer and manager Arnel Development Co.
COMPS warned that it only reports deals that it can confirm, so some large transactions for which details couldn’t be obtained may have been left out.
SOME BIG REAL ESTATE DEALS IN ORANGE COUNTY
Of the 25 biggest real estate deals in Southern California last year, 11 occurred in Orange County, according to COMPS Inc., a San Diego market research firm. Four of the transactions involved office developments, and the others were purchases of apartments and land for residential development.
Pictured are the top office purchases in the county in 1988.
PACIFIC FINANCIAL PLAZA
Location: 800-840 Newport Center Drive, Newport Beach
Use: 2 office buildings and restaurant
Price: $83 million
Buyer: California State Teachers Retirement System
Seller: Pacific Mutual Life Insurance Co.
Size: 268,887 square feet
NEXUS FINANCIAL CENTER
Location: 711 S. Parker St., Orange
Use: 3 office buildings
Price: $58.2 million
Buyer: JMB Realty Trust
Seller: Nexus Equities U.S.A.
Size: 305,000 square feet
CHARTER CENTRE
Location: Beach Boulevard and Warner Avenue, Huntington Beach
Use: shopping center and high-rise office
Price: $55 million
Buyer: Guardian Savings & Loan Assn.
Seller: Mola Development Corp.
Size: 317,162 square feet
DUPONT CENTRE
Location: 2201, 2301 Dupont Drive, Irvine
Use: 2 office buildings
Price: $51.2 million
Buyer: USAA Real Estate Co.
Seller: Dupont Centre Associates
Size: 250,000 square feet
OTHER LARGE TRANSACTIONS IN COUNTY IN 1988 Price (millions): $57.5 City/Address: Mission Viejo NE of Oso, Marguerite parkways Use: Residential development Buyer: Home Capitol Corp. Seller: Mission Viejo Co. Size: 416 acres Price (millions): $42.9 City/Address: Mission Viejo, near Santa Margarita Parkway Use: Mixed use seniors project Buyer: J.M. Peters Co. Seller: Mission Viejo Co. Size: 161 acres Price (millions): $35.3 City/Address: Huntington Beach, 21661 Brookhurst Ave. Use: Apartment complex Buyer: Richard J. Battaglia Seller: Matteson Investment Corp. Size: 374,360 Sq. Ft. Price (millions): $35.2 City/Address: San Clemente, Avenidas La Pata & Pico Use: Mixed use development site Buyer: Rancho San Clemente own Center Associates Seller: Unit of Western S&L; Size: 90.07 acres Price (millions): $33.2 City/Address: Placentia, 310 S. Jefferson Ave. Use: Apartment complex Buyer: The Pacific Co. Seller: Somerset Park Development Size: 352,352 Sq. Ft. Price (millions): $33 City/Address: El Toro, Portola Parkway Use: Planned community Buyer: J.M. Peters Co. and Bramalea California Inc. Seller: Foothill Ranch Co. Size: 282 acres Price (millions): $26.8 City/Address: Costa Mesa, 1142 Buckingham Dr. Use: Apartment complex Buyer: Arnel Management Co. Seller: Wells Fargo Bank Size: 215,106 Sq. Ft. Source: COMPS Inc.
