ORANGE, CA-The CB Richard Ellis Strategic Partners USOpportunity 5 fund has taken ownership of the 386,000-square-footOrange City Square office and retail project after buying anon-performing first mortgage note secured by the property andforeclosing on it. The new owner, citing its forecast for improvingmarket conditions, sees upside in the class A property through thepotential to fill the 40% vacancy at the project, which is afour-building campus composed of 373,775 rentable square feet ofoffice space and 12,392 rentable square feet of retail space onapproximately 14 acres along the Garden Grove (SR-22) Freeway atthe City Drive South.

“Our forecasts call for a strong market recovery to take holdwithin the next 12-18 months as employment begins to recover,resulting in improved office occupancy levels and strengtheningrents,” says principal Phil Hench of CBRE Strategic Partners US.Hench notes that the ownership’s new basis in the property issubstantially lower than peak pricing and replacement costs andthat the new owner is well-capitalized.

Opportunity 5 fund acquired the note secured by Orange CitySquare in a transaction in which the seller was represented by theCB Richard Ellis team of Bob Smith, Paul Jones and Karen Scholte inthe company’s Newport Beach office. The team also recently brokeredthe $14.75 million sale of an 89,063-square-foot office building inthe City of Orange in conjunction with Kevin Shannon of CBRE’sSouth Bay office.