Tokyo-Based Shuwa May Be Trying to Sell Building

The first big building bought by Japanese investors in Orange County may be up for sale.

A Shuwa Corp. spokesman said the company has been approached by “several brokers” about selling the Taco Bell tower in Irvine, but added, “we don’t know if we’ll sell the building.”

Tokyo-based Shuwa issued a one-sentence statement in response to a Wall Street Journal article Friday that quoted brokers as saying the building was already on the market.

Shuwa bought the 12-story building from Newport Beach developer Koll Co. in 1987. Shuwa paid $64 million, a price real estate brokers considered high--at least for U.S. buyers who couldn’t borrow money as cheaply as Japanese investors.

So if Shuwa is to recoup its investment, it will probably have to sell to another Japanese investor, brokers said. It’s unlikely that U.S. investors will be interested in the building at that price.

And a crop of recent economic problems in Japan could make the building a tough sell to Japanese investors. Interest rates in Japan are nearly as high as in the United States, which means Japanese investors are reluctant to pay premium real estate prices.

The anemic U.S. real estate market doesn’t hold much appeal for U.S. or foreign investors these days. The Southern California market, while more robust than much of the rest of the nation, still has a surplus of office space. In fact, some big Japanese investors like Shuwa are said to be considering selling some of their U.S. real estate holdings.

Another problem in selling the building is that Taco Bell’s 10-year lease expires in 1996. The big fast-food chain moved into the building in 1986 and leases all 278,000 square feet.

While Taco Bell says it has no plans to move, things could change in five years, which poses a potential risk for a buyer.