11.20.2017

Orange Tower Gets Well-Connected Owners

Orange County Business Journal, November 20, 2017

Lincoln Partners With Kushner-Backed Group

Lincoln Property Co. has added another big Platinum Triangle property to its local portfolio, buying the 14-story Orange Center Tower office building with backing from a well-connected financial partner.

The local office of Dallasbased Lincoln Property, a real estate investor and developer with a number of area holdings, partnered with New York-based Cadre to buy the 281,000-squarefoot office just north of the Santa Ana (5) Freeway, a short walk from Angel Stadium of Anaheim.

Lincoln and Cadre paid $93.5 million for the Orange office property, real estate sources tell the Business Journal.

It’s their first venture together, as well as the first Orange County investment that Cadre— an upstart online real estate firm designed to make it easier for wealthy people to invest in commercial property—is known to have made.

Cadre was co-founded a few years ago by Thrive Capital’s Joshua Kushner— brother of White House senior adviser Jared Kushner— and has financial backing from PayPal co-founder Peter Thiel and Goldman Sachs, among others with ties to Wall Street and Silicon Valley.

The company was valued at about $800 million as of this year after its latest venture capital-backed funding round, according to news reports out of New York.

Leasing

Orange Center Tower is at 500 N. State College Blvd. on the home plate side of Angel Stadium. It previously was known as 500 Orange Tower.

In addition to the building, the property also includes a 43,000-square-foot 24 Hour Fitness gym.

The acquisition works out to nearly $290 per square foot for both buildings.

It’s the second-largest office transaction in Central OC this year by price, trailing only an estimated $115 million recapitalization deal involving the 1100 Town & Country tower in Orange that closed in September, according to CoStar Group Inc. records.

Orange Center Tower was sold by an affiliate of Greenwich, Conn.-based Starwood Capital Group, which paid an estimated $70 million for it in 2014, when it was about 40% leased.

It’s now 94% leased, according to marketing materials from brokerage Newmark Knight Frank, whose Kevin Shannon, Ken White, Paul Jones, Brunson Howard and Blake Bokosky had the listing.

The Orange County Social Services Agency moved its headquarters to the building after Starwood bought it and now is its largest tenant, leasing about 111,000 square feet.

Other large tenants include Amerisource-Bergen, Wells Fargo and legal firm JAMS, according to Newmark Knight Frank’s marketing materials.

Lincoln Property had been operating as property manager under Starwood’s ownership.

None of the parties involved in the transaction were able to comment on the deal, citing confidentiality agreements.

Orange Center Tower’s improving occupancy rates mirror much of what’s recently been seen in Central OC’s office market.

The class A office market—which runs about 8 million square feet—had 33% vacancy rates at the nadir of the last recession.

Vacancy rates there now stand at about 10%, according to area brokerage data.

Active Area

It’s Lincoln’s first reported office investment in the Platinum Triangle since mid2015, when it was part of a group that paid about $71 million for Stadium Gateway, a 273,000-square-foot office at 1900 S. State College Blvd.

The six-story building is about half a mile from Orange Center Tower.

In addition to those two offices, Lincoln acts as property manager of the Anaheim Regional Transportation Intermodal Center, the $188 million transportation hub between Honda Center and Angel Stadium.

ARTIC opened in 2014 and has about 13,000 square feet of food and retail space.

Lincoln, whose local offices in Irvine are headed by Executive Vice President Parke Miller, has been active on the food front this year, in addition to office investments.

It opened Trade, Irvine’s first upscale food hall, a few blocks from John Wayne Airport.

It’s also planning a food hall that’s in its first phase of construction at Flight, Tustin’s creative-office development.

The project, on the city’s former military base, will hold about 400,000 square feet of office space in its first phase. Construction began this summer, and steel has gone up for some of the buildings.

Lincoln is developing Flight in a venture with Boston-based Alcion Ventures.

Sales, Development

The Platinum Triangle—the 840-acre swath of one-time industrial land around the baseball stadium—has seen a substantial amount of investor interest over the past month.

Chapman University recently announced plans to buy a recently built, 399-unit apartment complex in the area to add more student housing around its campus. Katella Grand is a few miles from the university, which said it will pay $148 million for the complex.

Another 5,158 residential units were under construction this past summer in the immediate vicinity of Orange Center Tower, according to Newmark Knight Frank’s marketing package for the property.

Also trading hands in the area: an 8.6-acre industrial site just off Katella Avenue that’s being considered for a variety of development types.

A partnership headed by Long Beach-based Pacific Industrial paid about $14.6 million for the property last month, records show.

By Mark Mueller