Will This Be The Year’s Largest Office Sale?

The Summit Office Campus in Aliso Viejo has traded hands, marking the largest office transaction in Orange County in the last six months and potentially one of the largest of the year. The five-building 479,451-sqaure-foot office campus traded hands between an unnamed global investment advisor and Rockpoint Group for an undisclosed price, but industry sources tell GlobeSt.com that it was upwards of $150 million. In addition to its size, this was a rare value-add office opportunity in the Orange County market.

“The Summit presented a rare opportunity to purchase a class-A, value-add, multi-building, institutional- quality project of significant size in South Orange County,” Paul Jones, executive managing director at NKF who represented the seller in the deal, tells GlobeSt.com. “Because of the long-term ownerships in South Orange County—most notably The Irvine Co.—these opportunities don’t come around very often. Furthermore, a majority of the transactions occurring in Orange County today are core and core-plus. Value-add deals of this size are harder and harder to purchase late cycle. The Summit is the largest Orange County office transaction year-to-date, which broke the previous high watermark, set by City Tower back in March.” In addition to Jones, Kevin Shannon, Brunson Howard, Ken White, Rick Stumm and Blake BokoskyJones also represented the seller in the deal.

The owner sold the property to take advantage of the strong market for office investment, especially for value-add deals. “After owning the Summit for nearly 15 years, the seller felt it was a good time to take advantage of today’s healthy capital markets environment,” adds Jones. “While there is a tremendous amount of capital chasing value-add office projects up and down the West Coast, there are few value-add deals—especially at this scale—so the seller felt confident this was the right time to monetize the project and that it would attract significant buyer interest.

So, it was no surprise when the property saw strong interest from investors. As a result, the marketing team started the marketing process early with a soft launch in December, and they saw interest from a wide range of capital sources. “Knowing this would be the first large, value-add deal to price in Orange County in 2018, we did a soft launch of the deal mid-December 2017 and hit the ground running in January to take advantage of investors’ fresh debt and equity allocations,” says Jones. “This proved to be a good strategy; the interest level in the Summit was one of the strongest we have experienced on any transaction in Orange County with an exceptional number of confidentiality agreements and property tours. We saw interest from institutional domestic and foreign capital, along with a select handful of high net worth and family offices, who also pursued this opportunity.”

The same team closed the sale of the City Tower in Orange, which was another sizable transaction this year in Orange County. The two transactions illustrate the strong demand for quality office investment in Orange County this year.