Highridge Partners Closes $31 Mil OC Office Buy
taken from rentv.com
Highridge Partners has completed the purchase of 3 MacArthur, a 246.8k sf office tower on three acres in the South Coast Metro area of Orange County, in an all-cash transaction valued at $31 mil, or about $125/sf. The
3 MacArthur Place, South Coast Metro
acquisition marks the debut of the firm’s $500 mil investment program targeting Class A properties in top-tier office markets in California. The program is the latest in the firm’s series of successful, strategic commercial real estate investment initiatives over more than three decades.
The 11-story, Class A office tower was acquired from Tishman Speyer Office Fund, which had purchased the building in 2007. The property is part of the master-planned MacArthur Place development that features a mix of hotels, retail, restaurants and residential properties. 3 MacArthur includes a subterranean parking garage and is currently 78 percent leased to a variety of businesses including Omnipoint Communications (T Mobile), Tenet Health Systems and Archstone Smith, as well as several law firms and other professional service providers.
The building is prominently positioned within Orange County’s Greater Airport Area, offering a high-identity location and superb access to the 55 and 405 Freeways. It is also situated in close proximity to the Orange County Performing Arts Center, Segerstrom Concert Hall, South Coast Repretory Theatre, South Coast Plaza, Crystal Court, John Wayne Ariport and numerous dining and service amenities.
Tishman Speyer was represented by Michael Kane, Robert Smith, Karen Scholte, Paul Jones and Dean Chandler of CB Richard Ellis’ Newport Beach office, and Mark Friend of CBRE’s Anaheim office. Highridge Partners was repped by Kevin Shannon and Ken White of CBRE’s South Bay office.
Highridge Partners, led by founder John Long and operational partner Jack Mahoney, sold its complete portfolio in 2006 and 2007 when real estate values were peaking. Its return to real estate is sure to be interpreted by real estate watchers as a confidence building signal.
“Our highly disciplined approach to real estate investment has positioned our firm to be able to take advantage of opportunities in turbulent times. Over the past year we have assembled an investment team that includes real estate and finance professionals who are among the best in their fields,” said Long, CEO, Highridge Partners. “With a strong team and a pool of ready capital, we can quickly complete a comprehensive property analysis, determine if it fits our investment parameters, and close deals. We completed the 3 MacArthur transaction in just 40 days.”
“3 MacArthur fits our investment criteria, which targets established office properties in mature destination markets,” notes Mahoney, Executive Vice President at Highridge. “Businesses want to locate in areas that offer amenities, such as retail and restaurants, with attractive environments and convenient access. Markets with these attributes, like MacArthur Place, will be the first to rebound.”
Highridge Partners applies an investment approach that brings together a high-level of economic and market analysis and a select group of experienced professionals that span the many disciplines required to quickly complete thorough due diligence and inform the firm’s investment decisions. Another attribute of the Highridge investment model is a management and leasing plan that enhances a building’s appeal to tenants which in turn maximizes the property value.
“We factor the leasing plan into our investment underwriting. To capture new tenants in this competitive market, we will offer tenant improvement packages and lease structures that will make our buildings more desirable and an easy choice for businesses,” Mahoney added.
To execute its management and leasing program at 3 MacArthur, Highridge Partners has engaged RiverRock for on-site property management and CBRE for leasing.
In addition to targeting the most desirable destination office markets in California, Highridge Partners is currently seeking Class A buildings ranging from 100k sf to 500k sf. “Our disciplined model is most successful when applied to selective investments of individual properties rather than large portfolios. A careful review of individual buildings against our investment matrix is a strategy that has consistently proven to achieve the greatest returns,” Mahoney observed. A compelling example is 3 MacArthur, which was purchased for 30 percent of its cost to build.
Highridge Partners is a privately held, international real estate investment company founded in 1978 by Long, an MBA who applies economics principles to spot undiscovered opportunities and turn them into high value properties. Often called a “contrarian” investor, Highridge Partners has acquired, developed or financed over $7 bil of assets. The company’s investments have spanned the entire range of real estate including single family housing, apartments, retail, office, industrial, hotels, and entertainment venues.
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