Blackstone Acquires Office Towers in Santa Ana, Calif. for $129M

By Keith Loria, Contributing Editor

An affiliate of Blackstone has acquired Griffin Towers, a pair of 12-story plus penthouse Class A office towers in Santa Ana, Calif., from Lincoln Property Co. and partner Angelo, Gordon & Co., for $129 million.

The deal is the largest commercial office transaction to take place in Orange County in 2014.

“Griffin Towers is among the finest constructed assets in the Orange County airport area,” Kevin Hayes, Lincoln Property Co.’s senior vice president, told Commercial Property Executive. “The property layout, its visibility and floor plate functionality make it an appealing property to tenants. Our partnership was attracted to these intrinsic attributes despite the distress in the marketplace when we acquired the property in March of 2008.”

Griffin Towers is situated on seven acres at 5 and 6 Hutton Centre Drive, in the master-planned MacArthur Place development. It contains 549,940 rentable square feet and includes an adjacent six-story above ground parking garage, a retail arcade featuring the newly opened Griffin Grill, a circular driveway plaza, and a three-story granite atrium lobby.

Since acquiring the property in March 2010, Lincoln Property Co. and Angelo, Gordon & Co., completed an extensive lobby upgrade and made numerous improvements to common area corridors, elevators and the conference center. The companies also installed new landscaping, updated seating areas, renovated the on-site café and redeployed a dormant co-generation plant that now produces nearly 77 percent of the buildings’ power on-site.

According to Hayes, after acquiring the asset in what was effectively a short sale, the joint venture had a significant business plan to execute.

“In addition to remedying deferred maintenance and making cosmetic upgrades, we took Griffin Towers from 70 percent leased to almost 88 percent (more than 100,000 of positive absorption) and renewed its largest tenant,” he said. “We felt that we could harvest the asset and print a ‘win’ for our investors and eliminate any of the risk associated with a hold.”

The buildings’ largest tenants currently include Corinthian Colleges, CH2M Hill, Ultimate Software and Premier Business Centers.

Interestingly enough, Griffin’s only unfixable flaw is its address, according to the brokerage community.

“The property tends to operate as a value play for tenants that want to pay less rent than in Irvine or Costa Mesa, but its proximity to major airports, freeways, theaters and restaurants has proven to be a big draw,” Hayes added. “In fact, Lincoln Property Co. had its Orange County headquarters on-site for the duration of our hold, and we greatly enjoyed being at Griffin Towers.”

Kevin Shannon, Bob Smith, Paul Jones and Ken White of CBRE represented Lincoln in the transaction. Blackstone was self-represented.