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ORANGE, CA-The CB Richard Ellis Strategic Partners US Opportunity 5 fund has taken ownership of the 386,000-square-foot Orange City Square office and retail project after buying a non-performing first mortgage note secured by the property and foreclosing on it. The new owner, citing its forecast for improving market conditions, sees upside in the class A property through the potential to fill the 40% vacancy at the project, which is a four-building campus composed of 373,775 rentable square feet of office space and 12,392 rentable square feet of retail space on approximately 14 acres along the Garden Grove (SR-22) Freeway at the City Drive South.

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

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