The Irvine Co. has shown strong interest in the roughly 5.5 million-square-foot office portfolio of CommonWealth Partners LLC, according to sources familiar with the sale process.
Some sources said billionaire Donald L. Bren's Irvine Co., one of the largest private landowners in the state, has submitted an informal bid of about $1.6 billion for the properties, which include several prominent L.A. County office buildings. Another source said the figure for the non-binding expression of interest was closer to $1.5 billion.
Irvine Co. is expected to file a formal bid on Tuesday, the deadline for companies interested in buying the portfolio to place their chits with the broker, Secured Capital Corp. Calls to Secured Capital weren't returned.
Sources said Irvine Co. valued the portfolio higher than any of the other serious contenders for the portfolio, including J.P. Morgan & Co. Inc. and a partnership led by Equity Office Properties Trust. Houston-based Hines,
Trizec Properties Inc. and possibly Maguire Properties Inc. are expected to submit bids, too, sources said.
Bidders not expected to stick around for Round 2 are Arden Realty Inc., California State Teachers Retirement System and a partnership of Beacon Capital Partners Inc. and CarrAmerica Realty Corp.
Los Angeles-based CommonWealth last month listed its entire portfolio of 13 properties, including the 53-story tower at 777 S. Figueroa St. in downtown L.A. and three high-profile Glendale office buildings.
CommonWealth owns its properties through a partnership with Rockefeller Group International Inc. and the California Public Employees Retirement System, which voted at the end of last year to cut back its overall real estate holdings. Calpers spurred the portfolio sale, sources said.
While an aggressive real estate developer and buyer, Irvine Co. has traditionally focused on dominating its core Orange County habitat. It has diversified in recent years, and now has about 20 percent of its holdings outside Orange County. Irvine Co. owns Fox Plaza in Century City, 1221 Ocean Ave. in Santa Monica and the Symphony Towers in San Diego, along with offices and apartments in the Silicon Valley.
The CommonWealth portfolio has only one property in Orange County, the 786,000-square-foot Pacific Arts Plaza in Costa Mesa. It also has properties in Phoenix, Denver and Honolulu, which would represent a further geographic diversification for Irvine Co.
Irvine Co., JP Morgan and EOP all have easy access to cash and debt, making them the favorites to win the bidding contest, sources said.
Irvine Co.'s core holdings derive from developing the 120,000-acre Irvine Ranch, formed in the mid-1800s when James Irvine bought out its Mexican land-grant holders. Bren, the company's owner and chairman, is worth $4.3 billion and is the 38th wealthiest American, according to a 2004 ranking by Forbes magazine.
Developer Ron Rasak's RKR Inc. has sold the Promenade at Town Center in Valencia for $66.6 million.
CPF Promenade LLC paid $365 a foot for the 182,500-square-foot center, which is anchored by a Pavilion's supermarket and interior design retailer HomeGoods.
Rasak opened the Mediterranean-style center with its waterfalls and pedestrian walkways three years ago. After successfully leasing the property, he listed it on the market in December 2003 with Barry Rothstein, a vice president in NAI Capital Commercial's Encino office.
Rothstein said the complex attracted a number of bids before CPF Promenade took the property under contract in September and closed the deal last month.
"I've called this market the school-of-fish theory," Rothstein said. "It's a sellers market with huge buyer demand. These school of fish are all different sizes but they are all biting at the same thing."
Rothstein, who represented both sides in the deal, said the principals behind CPF Promenade wouldn't reveal themselves.
The company is registered to Cornerstone Real Estate Advisers LLC, according to the California Secretary of State's office. Cornerstone is an adviser to pension funds, endowments, foundations and insurance companies.
American Commercial Equities LLC, a Malibu-based investment firm of Public Storage Inc. founder B. Wayne Hughes, went window-shopping on some of L.A.'s established retail strips.
The firm paid L.A.-based Trident Capital Group Inc. $61 million for a 16-property portfolio of storefront buildings in San Diego and Los Angeles.
In L.A., the firm bought 12 storefront properties on Melrose Avenue, Larchmont Boulevard and Santa Monica's Montana Avenue. Averaged out, the firm paid $365 a foot for the 167,000-square-foot portfolio.
The company is run by Hughes and his son, B. Wayne Hughes, Jr. The elder Hughes founded real estate investment trusts Public Storage and PS Business Parks Inc. The Business Journal pegged the Hughes family's net worth at $2 billion last year.
Bob Safai and Cris Houge, principals at Madison Partners, represented Trident and American Commercial Equities, respectively.
General Electric Co. has hired CB Richard Ellis Inc. to sell nine acres of prime Burbank real estate next to its NBC studios, where the Tonight Show with Jay Leno is taped.
The value of the parcel, between St. Joseph Medical Center and the television studios and north of Bob Hope Park, could be in the neighborhood of $30 million, brokers said.
The sale could be the first sign of a real estate fallout from the merger last year of GE subsidiaries NBC and Universal, brokers said. A marketing packet for the property is expected to be distributed in the next couple weeks.
Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at email@example.com .
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