REAL ESTATE: Values Irvine complex at $188M
By KATIE MURAR
Orange County Business Journal
August 2, 2021
One of Irvine’s larger office complexes near John Wayne Airport has a new ownership structure, following a recapitalization deal that values the two-tower property at nearly $190 million.
Los Angeles-based investment manager Oaktree Capital Management LP has joined Irvine-based EMMES Realty Services as a financial partner for the Centerview office project in the Irvine Concourse office park along Main Street.
The recapitalization deal marks the latest change for the 625,000-square-foot office and retail complex, which has undergone extensive renovations and upgrades since Emmes bought the property in 2017.
Oaktree’s involvement in the project comes as the two 12-story offices buildings-at 1920 and 2010 Main St-continue to get revamped, along with a collection of restaurants being added next to the property’s parking structure.
“We’ve been impressed with the renovations to date and look forward to partnering with Emmes on the remaining improvements to the project,” said Mark Jacobs, managing director and co-portfolio manager with Oaktree.
“Centerview offers the type of workspace environment that companies will be looking for as they return to the office such as upgraded building systems, indoor/ outdoor gathering spaces and an expanded amenity base,” Jacobs added.
The mahogany-colored offices are part of the 48-acre Irvine Concourse development, a 10-building campus that also has a pair of hotels and an Equinox Sports Club.
The recapitalization, one of the larger transactions of its kind reported in Orange County’s office market since the onset of the pandemic, values Centerview at about $188 million or $311 per square foot.
Oaktree’s new stake in the property was undisclosed.
Emmes paid a reported $200 million, or roughly $325 per square feet, for the property in 2017.
The buyer was reported to have taken out a $162.1 million loan from a financing unit of New York private equity firm KKR & Co. to fund the 2017 deal.
The most the complex has been valued at since 2008 is $211 million, according to CoStar Group Inc. records.
The 305,003-square-foot building at 1920 Main St. is reported to be about 74% occupied, and the 3 00, 004-square-foot 2010 Main St. is about 68% full.
The recapitalization is the first partnership between Oaktree and Emmes.
Oaktree has plenty of familiarity with Orange County’s office market, having partnered with the local office of Hines for numerous area deals over the past decade or so, including the 4000 MacArthur office towers a few miles away.
“Oaktree is a highly sophisticated global investor with deep local ties,” said Emmes CEO and Chairman Andrew Davidoff.
“The depth of their relationships dovetails well with Emmes’ operational expertise and our collective vision for Centerview.”
Centerview is Emmes’ only local holding; it previously owned the 4000 MacArthur complex, which was sold to Hines and Oaktree in 2015, as well as Irvine’s Michelson office tower at Park Place. It has other holdings in New York and New Jersey.
The twin 12-story offices, dubbed Centerview East and Centerview West, were built in 1987.
Emmes first kicked off renovations at the project shortly after acquiring it, and wrapped upgrades to the exterior plaza in March of 2021. It added new outdoor spaces, common areas and restaurants, including Porch & Swing, a contemporary restaurant concept led by head Chef Justin Werner, a former winner of reality cooking show “Chopped” and a former chef at Santa Ana’s Playground restaurant.
Upscale Mexican restaurant Sol will open at Centerview this fall, replacing El Torito Grill, while the former McCormick & Schmick’s restaurant space has been converted to Eighteen Main, a 17,000-square-foot comer retail parcel that will house three to four additional restaurants.
The company said these renovations have generated new tenant interest despite the pandemic, with north of 100,000 square feet of new leases inked over the past year.
New leases include two law frrms, Allen Matkins Leck Gamble Mallory & Natsis LLP, and Bryan Cave Leighton Paisner LLP, and mortgage lending firm Rate Plus Inc.
Oaktree and Emmes said they plan to continue to invest in the property, including mechanical equipment upgrades to improve building efficiency; the addition of a dedicated valet area to service new restaurants at Eighteen Main; common area upgrades; and additional balcony upgrades to “further integrate indoor office spaces with the abundant outdoor elements at Centerview.”
“During the pandemic, most outdoor spaces have rendered the best accommodation for work and safe social engagement. With such a large plaza at Centerview, proper distancing is not a problem,” said John Hill, principal of Robinson Hill Architecture, which oversaw the recent upgrades at the complex.
“The idea of living, working, and socializing all within walking distance makes open space and common social venues like the one at Centerview even more critical,” Hill said.