Irvine Co. to buy office buildings
Orange County’s largest landlord and developer, Irvine Co., announced Thursday that it had agreed to buy 17 office buildings in San Diego County from an affiliate of Blackstone Group.
New York-based investment firm Blackstone acquired the properties this month in a $23-billion leveraged buyout of Equity Office Properties, a Chicago real estate investment trust.
Fifteen of the former Equity Office buildings are in the University Town Center area of La Jolla, one is in Del Mar and one is in Mission Valley. They have a combined total of 2.1 million square feet of offices that are 89% occupied, privately held Irvine Co. said.
The portfolio includes the Plaza at La Jolla Village, a six-building group on 17 acres in University Town Center.
The tallest buildings there are the Northern Trust Tower, Pacifica Tower and Smith Barney Tower, all of which rise at least 10 stories.
The transaction is expected to close within two months, at which time Irvine Co. would take over managing and leasing of the properties.
The price was not disclosed. Irvine Co. already owns 10 office buildings in San Diego County and recently announced plans to build another.
Irvine Co. spokeswoman Jennifer Hieger said the company held its real estate for long periods of time and might invest in improvements to the former Equity Office buildings to increase their value.
Blackstone needs to sell several of the 590 buildings it bought from Equity Office to reduce the debt it took on to buy them.
“Right now the cash flow from the properties doesn’t cover their debt payments,” said analyst Craig Silvers of Bricks & Mortar Capital in Los Angeles.
Blackstone already sold eight buildings in New York for $7 billion. Bloomberg News, citing unnamed sources, reported Tuesday that an additional 53 buildings in Washington D.C., Seattle and Portland, Ore., have been sold for $7.55 billion.
Los Angeles real estate investment trust Maguire Properties Inc. is considered a leading contender to buy former Equity Office buildings in Los Angeles and Orange counties. The REIT Newshound, an industry newsletter, said Wednesday that Maguire was close to a $3-billion deal with Blackstone.
A Maguire representative declined to comment. Blackstone spokesman John Ford confirmed the transaction with Irvine Co. on Thursday but wouldn’t comment on other reported sales.
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