AEW Picks Up Microsemi Headquarters

ALISO VIEJO, CA-An unnamed global investment advisor has sold an institutional-quality corporate-headquarters building at 1 Enterprise Dr. here for an undisclosed amount to AEW Capital Management. The 109,948-square-foot building serves as the corporate headquarters for Microsemi Corp., a manufacturer of high-performance silicon and silicon carbide semiconductors for analog, mixed-signal, switching-power, RF-power and microwave application.

CBRE's EVP Bob Smith, first VP Paul Jones, vice chairman Kevin Shannon and SVP Ken White represented the seller in the transaction. “The property is an exceptionally high-quality, low-risk, core investment opportunity with a recently completed long-term lease,” says Smith. “Therefore, it provides AEW with a strong, secure and growing income stream.”

The building was built in 1999 by Flour Daniel Corp. and is one of only a handful of post-1999-construction, single-tenant, class-A buildings in the Orange County market. The property is 100% leased through January 2021 to Microsemi Corp., which equates to a remaining lease term of 7.4 years.

The four-story building is situated on a 7.27-acre parcel in proximity to the 73, I-405 and 55 freeways. The fireproof steel-frame building features exterior glass panels, extensive landscaping and views of the Saddleback Valley. The property also has a large first-floor lobby, a parking ratio of 3.95/1,000, a corporate boardroom with panoramic views, a fourth-floor executive kitchen, an on-site cafeteria and a gym with locker rooms and shower.

 “Contractual rents provide the investor with capital preservation and the annual rent escalations provide a hedge against further inflation,” says Jones. “It's located in one of Orange County's most dynamic and healthy locations; Aliso Viejo is a prime location for improving market fundamentals.”

According to Marcus & Millichap, those expanding their portfolios, together with new entrants into the office market, are helping generate investment momentum in Orange County. Most listings are targeted by seasoned operators searching for value-add deals, and properties with a vacancy rate in the 40 to 50 percent range are highly sought after by these investors.

Due to the high vacancy factor, cash buyers will be predominant players in this arena, though some investors with existing bank relationships may find bridge loans, M&M reports. Other buyers beginning to emerge in the market are former apartment owners. The extremely low cap rates in the apartment sector and lack of 1031-exchange opportunities has heightened the profile of office properties. In addition, average cap rates for stabilized office properties are in the high-7% to low-8% range, 250 basis points above the rate on apartment properties.

As GlobeSt.com reported in June, HFF arranged $33.5 million in financing for Summit Phase V, which consists of two class-A office buildings totaling 250,803 square feet here. The property is located at 20 and 30 Enterprise Dr. and includes a 1,233-space, five-story parking garage.