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FOOTHILL RANCH, CA-A private investor has acquired the 208,620-sf Foothill Plaza office property from Newport Beach-based Buchanan Street Partners and Steadfast Business Properties for $62.5 million. The property is a class A project that closed at a cap rate of 6.15% on projected first year net operating income, according to Buchanan.

Developed in 2002, Foothill Plaza consists of two three-story office buildings at 27422-27442 Portola Parkway, the primary east/west route for Foothill Ranch, off the 241 Tollway.

Buchanan Street Partners and Newport Beach-based Steadfast bought the office complex in 2005 for $34.8 million with Buchanan Street investing $5.9 million in capital from its Buchanan Fund III. SVP Stephen Blue at Buchanan says that the company’s original strategy was to stabilize and sell the Foothill Plaza after a holding period of five years.

However, Blue explains, Steadfast was able to bring the property to 98% occupancy quickly and take advantage of Orange County’s rapidly improving office market. “We were able to significantly shorten the investment period and earn a return far in excess of our initial expectations,” Blue says.

GlobeSt.com reported in March 2005 that the Foothill Plaza complex was 85% occupied when the joint venture of Buchanan and Steadfast recapitalized the asset, which Steadfast had owned and for which Buchanan provided new equity for the recapitalization. The recapitalization includes a new, five-year, fixed-rate loan with GE Capital , which Steadfast arranged through an existing relationship with GE.

Blue noted at the time that the deal was Buchanan Street Partners’ first partnership with Steadfast, which specializes in acquiring and managing value-added commercial properties. He described the property as “in a prime position to capture new leasing activity as market interest continues to pick up in South Orange County.”

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