Monday Properties has made its first Southern California purchase with the acquisition of Spectrum Tower, a multi-tenant office building in Laguna Hills, Calif. The West Coast announcement came one day after the real estate investment firm said it was expanding its East Coast holdings with a five-building office park deal in Alexandria, Va.
The firm did not disclose prices for either the Spectrum acquisition or the purchase of the 300,000-square-foot Beauregard Office Park that consists of 1500, 1600, 1800, 1900 and 2000 North Beauregard St.
Monday acquired Spectrum Tower, a 120,000-square-foot office property at 23046 Avenida de la Carlota in the South Orange County community of Laguna Hills. It’s Monday’s first major purchase on the West Coast since hiring CRE veteran Philip Cyburt as managing partner in February to spearhead the expansion. Cyburt, most recently CEO of Laurus Corp., a principal real estate investment private equity firm that invests in office, hospitality and retail, has over three decades of CRE experience.
“This acquisition is a tremendous accomplishment for Phil and our West Coast team. We remain focused on identifying unique investment opportunities and further expanding our footprint in Southern California,” Anthony Westreich, founding managing partner for Monday Properties, said in a prepared statement.
Monday bought the seven-story tower from TA Realty, which had owned the property since July 2007, when it purchased it from Invesco Real Estate for $35.7 million, according to Yardi Matrix data. Current tenants include Citizen Business Bank, Virginia Landry law offices, Regus, William Jordan Investments and STRADA Capital Corp.
Monday Properties representatives included Cyburt, Carl Groner and David Terian, while CBRE was represented by Bob Smith and Anthony DeLorenzo.
Cyburt said the building is 90 percent occupied, adding that within five years 80 percent of the leases will roll.
“It’s been real sticky from a tenants’ standpoint, which we like,” he told Commercial Property Executive.
The centrally-located property has access to the 5 and 405 freeways and is within a half-mile of the Irvine Spectrum Center, one of California’s largest outdoor regional centers with over 160 stores, 50 restaurants and three hotels.
“The acquisition of the Spectrum Tower building reflects the value proposition Monday Properties is seeking as we pursue good yielding real estate assets within major infill markets,” Cyburt said in a prepared statement. “South Orange County is one of the most active and healthy real estate markets on the West Coast that consists of a diverse innovative tenant base, above national averages for income and population growth and a high-quality standard of living.”
While Cyburt wouldn’t disclose the purchase price, he described it as a “highly competitive process.”
“We think the brokers and sellers did a good job,” Cyburt told CPE. “We’re looking at mid- to high-teens levered returns. That’s our target.”
He said the firm expects to invest about $2.5 million to $3 million on renovations that will include upgrading the lobby and adding outside seating areas.
Cyburt said he and his team are looking for office, multifamily and hospitality deals along the West Coast. Groner and Terian are focusing on Southern California, including Los Angeles, Orange County and San Diego, and he’s looking to add staff to cover Northern California and Pacific Northwest.
For now, Cyburt said they are looking at mostly office and multifamily deals. However, Cyburt has a hospitality background and he said he would be interested in some “select” hospitality opportunities, noting they would likely fall into boutique or experiential product categories.
He couldn’t provide details, but Cyburt said the firm expects to announce a Los Angeles-area office deal in the coming weeks.
Beauregard Office Park
Beauregard Office Park in Alexandria, Va.
While the Spectrum Tower acquisition represented a new market for Monday Properties, the purchase of the Beauregard Office Park in Alexandria increased the firm’s investment in the Washington, D.C., metro region. Monday Properties owns numerous office properties in Rosslyn, Va., where it recently completed an $888 million refinancing of nine premier buildings, including the ‘Twin Towers’ at 1000 and 1100 Wilson Blvd.
“The decision to acquire Beauregard Office Park is consistent with our investment philosophy and desire to expand our property holdings in the greater Washington, D.C., market. Monday’s mission continues to be focused on identifying unique investment opportunities, deploying capital wisely and providing exceptional environments for our current and future tenants,” Tim Helmig, managing partner, said in a prepared statement.
Existing tenants of the buildings, which range in size from three to six stories, include Inova Health System, Virginia Hospital Center, City of Alexandria and DXC Technologies (formerly HP Enterprises).
Monday Properties, which will provide management, construction and leasing services at the office park, said it plans extensive upgrades to the on-site amenities, common areas and landscaping to offer high-quality conference, fitness, concierge and food services.
“Monday Properties sees tremendous opportunity in Beauregard Office Park and is excited to upgrade the property to amplify the tenant experience. The acquisition will further strengthen Monday’s strategic thesis in finding unparalleled investments for our investors,” Westreich said in prepared remarks.
Helmig and Robert Klein represented Monday Properties in the transaction.
Monday Properties, which has offices in New York, Los Angeles and Rosslyn, did not identify the seller. However, Duke Realty acquired the office park in March 2006 from The Mark Winkler Co. for $855 million as part of a 2.9 million square-foot-office and 82,000-square-foot industrial portfolio deal, according to Yardi Matrix data. Duke Realty had been listed recently as the owner, manager and leasing agent for the property, Yardi Matrix noted. In the last few years, the Indianapolis-based REIT has been focusing more on industrial and healthcare properties and has been selling off many of its suburban office properties.