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Southern California is now home to another example of sharply deflated office values.
Pendulum Property Partners, an affiliate of Los Angeles-based asset management firm Ares Management (ARES), sold One Pacific Plaza, a 70 percent leased, 394,000-square-foot office campus in Huntington Beach for $42 million. That’s 66 percent less than the $124.5 million that it traded for almost five years ago. Pendulum did not return requests for comment.
The Orange County Business Journal first reported the deal, citing unidentified sources. According to Trepp, the property is still encumbered by $90 million of debt from SunTrust Bank, which remains from a $97 million acquisition loan in 2018. Newmark told the OCBJ that the deal is the first notable lender-facilitated office sale in Orange County in the wake of the pandemic.
A family office tied to Joe C. Wen, founder of a Taiwan-based conglomerate named Formosa, acquired the property, which features one 12-story tower and two six-story buildings at 7711, 7755 and 7777 Center Avenue next to the Bella Terra shopping center. The building is also the headquarters for BJ’s Restaurants.
The deal joins other sales that indicate a generational drop in the value of traditional office real estate in Southern California, including but not limited to Orange County. For example, Terreno Realty acquired an office in Santa Ana for the same price it traded for six years ago, and plans to spend another $41 million converting it into an industrial property. Kearney Real Estate also plans to build a 164,000-square-foot industrial center in place of the Elevate@Harbor office campus nearby, and Blackstone notably sold another Santa Ana high-rise office at a 36 percent loss in April.
Wen is also acquiring other discount offices, according to OCBJ. The Newport Beach, Calif.-based businessman paid $25 million for the South Coast Metro office in February.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
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