After bowing out as a finalist to develop a new San Diego Civic Center complex in August and completing a LEED-certified high-rise in the University Towne Center area in September, Hines has wasted no time in widening its local market share.
Based in Houston, the privately owned international real estate firm acquired 31 Southern California properties, totaling 4.5 million square feet, for an undisclosed price last week. The purchase included five properties consisting of eight buildings with 380,000 square feet of office space in San Diego. The office buildings in Del Mar Heights, Rancho Bernardo and Sorrento Valley have a combined assessed value of $133 million, according to county records.
Hines acquired the properties after the owner, Cabi Developers, a Florida-based arm of the Mexican property company Gicsa, reportedly could not keep up on loan payments. CoStar Group, a Maryland-based resource for realty information, reported in early November that Cabi failed to make its first mandatory amortization payment of $105 million as required under a $1.5 billion financing agreement it arranged to acquire the Southern California portfolio from Arden Realty in July 2007.
“We were the first lien holder on that portfolio and negotiated with the former owner a negotiated turnover,” said Paul Twardowski, Hines’ San Diego vice president.
He says Hines will focus on leasing available tenant space in all properties and improving management of the buildings.
“Right now it is all about these assets,” Twardowski said. “We do not have any near-term plans to sell these properties.”
Proposed Upgrades
Cabi reportedly had renovations planned for the properties and Hines anticipates reviewing those proposed upgrades, according to Twardowski.
Cabi did not return calls by last week’s deadline.
Cushman & Wakefield manages the San Diego properties. Brokers with CB Richard Ellis represent lessees in Foremost Professional Center and Bernardo Regency Center in Rancho Bernardo; Cushman & Wakefield represents tenants in Carmel Valley Centre in Del Mar Heights; and Grubb & Ellis|BRE Commercial handles leases in Three Governor Park. The Legacy Creekside currently does not have broker representation, according to Hines.
Among the buildings’ major tenants are SAIC, which leases space in the 37,000-square-foot Legacy Creekside on Sorrento Valley Road; and Sky MobileMedia and Washington Mutual, which have offices in the 56,000-square-foot Carmel Valley Centre I building on El Camino Real.
Hines’ San Diego portfolio now features more than 1.1 million square feet, including 445,000 square feet in Golden Eagle Plaza at 525 B St. downtown.
Hines controls assets worth $23 billion, according to its Web site.
