SAN DIEGO-There’s no moss growing on Maguire Properties. The Los Angeles-based REIT has been extremely active so far this year. Its latest deal is the sale of two North San Diego County properties for $298 million.

Maguire officials were unavailable for comment at press time, but the properties are Pacific Center, a 438,960-sf office site in Mission Valley and Wateridge Plaza, 268,957 of trophy office space in Sorrento Mesa. The buyer of the properties was not disclosed. The sale is expected to close during the second quarter 2007.

Maguire announced last month that the two San Diego area sites would be among 11 of its office projects totaling 17 properties in Southern California that would go on the block. The buildings became part of a $2-billion disposition strategy for the REIT to reduce debt after its $3-billion purchase of 8.1 million sf of former Equity Office Properties portfolio space from Blackstone.

“We remain focused on completing our acquisition of the EOP assets and lowering our debt levels to accomplish our balance sheet objectives,” says Robert F. Maguire III, chairman and CEO of Maguire Properties, in a prepared statement. In an earlier story, Maguire said that the REIT’s sale of the assets “will enable us to focus on a streamlined asset base in L.A., Orange and San Diego counties, including our development pipeline.”

As for the two San Diego area properties, Maguire didn’t hold them long. In January 2005, Maguire picked up Wateridge Plaza as part of its $1.5-billion acquisition of 10 properties totaling five million sf. The REIT bought that portfolio, which included the one-million-sf 777 S. Figueroa building in Downtown L.A., from a partnership of CommonWealth Partners LLC, Rockefeller Group International Inc. and the California Public Employees Retirement System. The assets were known as the Fifth Street Properties Portfolio and also included properties in Orange County, Denver, Phoenix and Austin, TX.

Built in 1984, the class A Wateridge Plaza office campus in Sorrento Mesa includes three low-rise office buildings. Tenants include Alaris Medical Systems and Quintiles Pacific. According to an office report by Burnham Real Estate, “Sorrento Mesa remains the county’s hottest office market to-date with 1.2 million sf of net absorption in 2006–the highest of any San Diego County submarket.”

Development is also heating up in Sorrento Mesa with Maguire being part of that equation. “Sorrento Mesa’s development pipeline will continue to be very active in 2007,” says Ron Miller, senior vice president with Burnham Real Estate. “In addition to the recently completed 145,000-sf Pacific Center III, Kilroy’s 318,000-sf Cardinal Health building is well under way, and Maguire’s 12-story 317,000-sf San Diego Tech Center building is scheduled to break ground in the second quarter of 2007.”

Maguire had an even shorter relationship with Pacific Center. Acquired in February 2006 for $149 million, the 6.4-acre office campus includes two 10-story office buildings. Maguire bought the property from DRA Advisors, a New York investment manager. The site includes an adjacent six-story parking garage with 1,421 parking spaces. The property was 84% leased at the time of sale, with major tenants including Progressive Casualty Insurance, Preferred Employers Insurance, Countrywide Home Loan, the California Attorney General’s Office and URS Corp.

Interestingly enough, Maguire very likely unloaded the high-quality Pacific Center site at the right time. According to the Burnham report, “Mission Valley is beginning to see a flight from quality as tenants look to avoid the increasing rental rates for newer class A properties, which are reaching nearly $3 per sf.”

Burnham’s Miller says “class B and B+ space is priced approximately 15% to 20% less per sf and landlords are maintaining the buildings in a first-class, well-kept, clean and refurbished basis to capture those tenants who will not pay the higher class A rates.”

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