Koll Co., Investor Acquire $300 Million in Trust Properties, Including 16 in County
The Koll Co. of Newport Beach said Tuesday that it has joined with a private investor to acquire $300 million worth of industrial and office properties, including 16 in Orange County, from a publicly traded real estate investment trust.
The big commercial building firm said it has purchased the entire real estate property portfolio of the Wells Fargo Mortgage & Equity Trust, based in San Francisco, in partnership with William L. Davis of Santa Monica. The transaction includes 42 industrial and commercial properties in 10 states.
The Wells Fargo trust is being dissolved, and proceeds from the property sale will be distributed to its investors.
Koll Co. Chairman Donald Koll said the acquisition, which closed Thursday, is the largest purchase in the company’s history and will add about 3.5 million square feet to its real estate portfolio, increasing the total to 33.5 million square feet.
Ray Wirta, president of Koll Co.’s management services group, said Koll had negotiated with representatives of the Wells Fargo trust for a year, with Davis joining the talks about six months ago.
He said Davis agreed to provide an equity down payment of an undisclosed amount, and Citicorp Real Estate Services lent the partnership more than $100 million.
Koll said the acquisition includes about 4 million square feet of property, but the company plans to sell about 500,000 square feet of office and industrial space and some undeveloped land in Texas, Idaho, Georgia, Florida, Colorado and Massachusetts. He said Koll will retain properties in California and Arizona, where it already has property-management operations.
Most of the properties that Koll purchased in Orange County are low-profile industrial and office buildings. They include the MSI Building in Costa Mesa, the Ultrasystems headquarters complex in Irvine, the Wells-Stein Industrial Center in Fullerton and a group of 13 office- industrial buildings and three retail buildings in Garden Grove.
One of the largest industrial and commercial builders on the West Coast, the Koll Co. also is in the development and property-management businesses.
For the past five years, the company has been acquiring industrial, retail and office buildings for its portfolio, which Koll characterized as the largest managed by a single company on the West Coast. “We buy and hold for long-term appreciation and investment,” he said.
Wirta said the Koll Co. is trying to take advantage of a nationwide trend toward real estate portfolio consolidations. “We are working on another portfolio purchase that is even larger,” he said. He declined to divulge details.
Koll said all of the company’s acquisitions have been made in joint ventures with financial partners. “Everything we do is with a joint venture partner, a money partner, and we manage the properties,” he said.
He said Davis, a longtime friend, wanted to reinvest profits he had made on the sale of property in Hawaii.
Davis could not be reached for comment. But Gene Croft, an associate of Davis who worked closely with him on the Wells Fargo deal, said Davis had seized the “opportunity to make a good investment with a strong group.”
Croft said that Davis, 49, is a private businessman with large farmland holdings in Ventura County and an array of other real estate investments. He said Davis recently participated in the sale of the Hue Hue Ranch on the island of Hawaii to the Regent Hotel Group.
Betty Lattie, spokeswoman for Wells Fargo & Co., said that trustees of the real estate trust had been talking to a number of prospective buyers since October, 1987, including California Federal Savings & Loan. But she said Koll’s offer was “the one that fit,” and the trust’s shareholders approved a plan of liquidation in late June.
Wells Fargo officials said the decision to liquidate the trust, which was founded in 1977, was influenced in part by its poor financial performance last year. The trust reported a loss of $12.6 million for its 1988 fiscal year, compared to a profit of $10.1 million the previous year. In the trust’s annual report, the loss was blamed in part on problem loans and poor returns from some properties, especially those in Texas and Colorado.
ORANGE COUNTY PROPERTIES
The following Orange County properties were acquired by Koll Co. from Wells Fargo Mortgage & Equity Trust. Also acquired were five properties in Los Angeles County, two in San Diego County, five in the San Francisco Bay Area, and a total of 14 properties in Idaho, Nevada, Arizona, Colorado, New Mexico, Texas, Georgia, Massachusetts and Florida.
Property City Wells-Stein Industrial Center Irvine Garden Grove Industrial Center Garden Grove 2941 Alton Ave. Irvine 1842 Reynolds Ave. Irvine Bentley I & II Irvine Inmac Building Costa Mesa American Datacom Irvine Helionetics building Irvine 1702 Moulton Parkway Tustin Toshiba building Tustin Redhill building Costa Mesa MSI building Costa Mesa University Plaza Newport Beach Ultrasystems I & II Irvine
Source: Koll Co.
