Koll Co., Partner Buy 297 Acres From Union Pacific

The Koll Co. and a Japanese partner have bought nearly 300 acres in Riverside County from Union Pacific Corp., and the Orange County developer said Wednesday it is negotiating to buy still more property from the railroad holding company.

Koll and Ohbayashi America Corp., whose parent is one of the largest contractors in the world, paid $32 million for 297 acres in the unincorporated Mira Loma area at the northwestern tip of Riverside County.

The partners plan to turn the property into a business park.

The deal comes several months after Koll’s proposed $532-million purchase of most of Union Pacific’s land and buildings fell through. It would have been Koll’s biggest acquisition.

Union Pacific, which operates the railroad of the same name, said the previous deal fell through because Koll and an unnamed partner couldn’t prove they could come up with the money. Koll, however, said its financing was solid.

In any event, since then Koll officials have continued to negotiate with Union Pacific for smaller pieces of property, including the Riverside County parcel.

The transaction is Ohbayashi’s second joint venture with Koll. The two companies are also building a $200-million, 28-story office tower in downtown Los Angeles. Ohbayashi has been in the development business in Southern California since the early 1980s.

The partners said the Riverside County property will be used to construct buildings for lease or sale to businesses. They will also sell land to companies that want to construct their own buildings. The first parcels are expected to go on sale by the middle of next year.

The huge Union Pacific deal that fell through included land and buildings in 19 states. The Riverside County parcel was part of that transaction.

One big West Coast developer who considered making an offer for the railroad property said recently that he considered it overpriced at half a billion dollars. Not so, said Chuck Schreiber, Koll Co. executive vice president in charge of acquiring property for the developer.

“People who say that obviously didn’t study the property very closely,” he said. “We spent a lot of time looking at it, and we were very happy with the price.”

The deal included railroad property as far east as the Washington suburbs and would have given Koll--which calls itself the West Coast’s largest property owner--a toehold in the East.

When the deal was announced in January, Koll was a little vague about whether it would develop the Washington property. Now the company isn’t saying whether it is still negotiating to buy any of the Eastern properties or whether it will stick to buying some of the railroad’s numerous West Coast holdings.

The railroad is selling its real estate because the development business hasn’t been profitable enough to boost publicly held Union Pacific’s stock price much. The railroad wanted to concentrate on its other, more profitable businesses.