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Investor loses $50 million on Santa Ana office tower
October 14th, 2009, 10:00 am · 46 Comments · posted by Jon Lansner
An 11-story Santa Ana office tower near John Wayne Airport will be sold soon — at a price $50 million-plus below what an Australian investor paid for it in 2007!
- Tishman Speyer Australia Limited announced it will soon be closing of the sale of 3 MacArthur Place for $30 million.
- Colliers identifies the buyers as Highridge Partners.
- The Wall Street Journal notes that: “The sale of the Orange County building, which was about 78% leased in June, is expected to fetch about US$30 million. In 2007, Tishman paid $83.7 million for the property, according to company documents.”
- When Tishman bought the property in 2007, it told investors the tower was: “an “A” grade asset in a market which we believe has superior long term growth prospects and which, with its existing vacancy, may benefit from the application of Tishman Speyer’s operating platform. We continue to remain confident that the portfolio is well positioned to benefit from continued strengthening in the U.S. office markets.”
- Says the landlord’s Web site of the buiilding: “The property is situated in the center of one of Orange County’s strongest transitioning submarkets, South Coast Metro. The amenity rich area, including the world-renowned South Coast Plaza Shopping Center, makes MacArthur Place a highly desirable live-work-play environment in Orange County.”
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hello detroit
Too bad they couldn’t just wait it out a couple more months.
I hear that the recession is over, prices have bottomed, and all us formerly doom-and-gloom haters are going to be bummin’ from all the missed opportunities . . . from ’sitting on the sidelines . . .
. . .. . wait, who’d I hear that from?
You heard that from people who stand to gain financially if you don’t sit on the sidelines. By “missed opportunities” they are referring to their “missed commissions.”
Has the recession ended? I didn’t get the memo.Are these commercial buildings undervalued. Hard to say, but you’ll need to take a buy and hold strategy. Commercial real estate has been on the verge of catastrophic drops in value for the last year. Go ahead and invest if you want to–but be prepared to lick your wounds when it goes further south like the housing market.
It would be interesting to see their financial analysis on deciding to sell it at such a hug loss versus yearly losses for hanging onto it for 10-15 years and waiting for a commercial market turnaround.
Of course, their financial analysis in 2007 said it was a great investment with long-term growth…
yeah and they might also have an immediate cash crunch which trumps everything.
For the past 15 years the home office has become more and more common - economically it’s an excellent choice from many aspects. I think the high rise building market is going to be in decline for a long time if not permanently.
There’s nothing like the smell of a 64 percent loss in the morning…….
(By this time next year, it might well have been greater than 75 percent)
Or move the building to Hong Kong…….
Hong Kong Apartment Sells For…$57 Million! (nearly $9256 / ft2)
Lawrence Delevingne|Oct. 14, 2009
http://www.businessinsider.com/see-the-hong-kong-apartment-that-just-sold-for-nearly-57-million-2009-10
and that is just for one of the two penthouse units of a butt ugly apartment building…
OMG, seriously! I stayed with a friend who had a luxe place and it was probably all of 400 sq ft. Don’t we all wish we could cook breakfast while we’re in the shower though? A little?
Hey everything is going fine, and rosy.
The Dow hit the 10,000 mark, and the Unemployement is about 10%
Everybody is bragging in wall street the economy is doing fantastic.
But reality is other.
And just how “bad” can/will it get…..?
Miami Condos 94% Off
Joe Weisenthal Jul. 24, 2009
http://www.businessinsider.com/miami-condos-94-off-2009-7
We’ve seen lots of wild haircuts in the world of real estate, but nothing like this.
Condovultures: A South Florida private equity group purchased 51 new, oceanfront condo-hotel units in the luxury One Bal Harbour complex at $63 per square foot, a discount of 94 percent off of the $1,100 per square foot average recorded sales price, according to a new report from Condo Vultures® LLC.
Elcom Condominium LLC with Jorge E. Arevalo and Thomas D. Sullivan in South Miami paid $2.6 million for 41,047 square feet of saleable space in the 124-unit Regent Hotel tower located on the west side of the 26-story, trophy complex in exclusive Bal Harbour.
nice! im callin bottom on FL condos.. :)
Thats a pretty good discount. They should make a good profit if they can find someone to buy those.
94% is a “pretty good discount?” Man you are very hard to please. What would be a GOOD OR EXCELLENT DISCOUNT? I guess you want them to simply sign over the deed??
$63 a foot for ocean front condos? That seller was a moron. I mean, talk about getting your head knocked off.
You respond to meltdown’s sarcasm like that and expect anyone here to take you seriously?
As was suggested before, Mulli, you just don’t get it.
call it an electronic snafu, but Meltdown’s first sentence was not on my screen…thus, my comment.
Oh, and pdu: you can continue to believe you carry a level of intellectual superiority over myself and others if it makes you feel better about yourself. You have exhibited a pompousness of late that leads me to believe that you are just not that nice of a person. You are becoming a NatBub. Ouch.
Same old game Mulli……..you, as usual, do a double shuffle when you are called out and have no way out.
“Electronic snafu” you claim prevented you from seeing Meltdown’s first sentence…..you suggest that’s the reason for you foolish response.
Problem here Mulli, it wasn’t his first sentence you responded to and again, I stand by my statement, Mulli, “You just don’t get it”.
That same tactic….denial of what you said and the old double-shuffle to divert your errors is so reminisent of the original t roll, the infamous ROC/pebbles/Thoughtful/Truthiness et.al. — It again makes me wonder if you guys are one and the same or just were both blessed with the same mental deficiency enabling you to live in denial of the real world and at the same time convince yourself you are fooling anybody with your BS.
You just don’t get it Mulli.
“Thats a pretty good discount. They should make a good profit if they can find someone to buy those.”
My response was very fitting with the preceding sentence not being there. You are just too quick for me pdu. You are certain that you know it all. I stand by my explanation as it is the truth. I have just been Mulliganville since the inception of my posting here. But the bears are convinced that “we are all one in the same.” How about you grow up just a tad professor and realize that you do not have all of the answers? But, that is impossible for you.
Here is what I see: a group of people that are absolutely thrilled housing crashed (I am fine with that), but stuck as the economy crashed right along beside it. Many of you scoff and laugh at the fact that some people chose not to see what was coming…but then several of you did not see the government intervening to the level that they did? Seriously? They will keep intervening. That is a guarantee.
I don’t get it huh…
The lower end is showing some signs of stabilization.
The upper end is going to experience severe pain as most of those owners that are selling have not capitulated yet.
The dollar will either continue to be devalued or inflation will return causing rates to increase along with other necessary goods. This will cause downward pressure on prices in RE here in OC.
The stock market seems healthy, but it is not as it will fall harshly from its current perch. When that will happen is anybody’s guess.
What you do not get is there is a plethora of people that are choosing to invest in RE today amidst all of the known risks laid out previously. It is good enough for them.
Pompousness is quite unbecoming…even you know that.
It’s because all the illegals that actually make up the majority of the population in Miami have no means of affording one of these…
Mulligan, I can absolutely assure you that pdu has no intellectural advantage over anyone!!hahahah.
He and the other bears suffer from the same pathetic syndrome.
They think that cutting and pasting doom and gloom articles makes them smarter than the rest, when in fact they are the most gullible, dependent followers of all.
It’s so obvious that they can’t see it. Anything that isn’t the majority opinion must be right…right???
Wow.
Don’t you have mindless document review to do?
VoiceofReason says:
October 15, 2009 at 9 am
“He and the other bears suffer from the same pathetic syndrome.
They think that cutting and pasting doom and gloom articles makes them smarter than the rest, when in fact they are the most gullible, dependent followers of all.”
In my experience, following facts and fundamentals is better than hope and wishful thinking like “they aren’t building land” or “90% of the population is still employed”, or other talking points.
Um, last time I checked, they really AREN’T making more land…..and 90% of the population IS working.
But you want to follow the facts rather than wishful thinking? And then call absolute FACTS wishful thinking.
That was funny!
is about time to send Those who give wrong info…… to jail
Who would want to go to downtown Santa Ana to do business? It will be leased to Nobama nation soon?
They should convert it to a for-profit-prison. It fits well for the area. They have a huge court house nearby already.
The city name “Santa Ana” just doesn’t fly locally. If it said Irvine or Costa Mesa, it would be different, but being in Santa Ana loses a bit of luster. Yes I know First American is in Santa Ana, but that doesn’t exactly help.
As an attorney, I have had many Latinos (it’s not an exaggeration to say about 10 per month) tell me that among the important reasons they even bothered to call was because I was NOT located in Santa Ana (I am in Orange), where they have already been ripped off countless times. They no longer trust any business that is located in Santa Ana. Honestly, this came as a surprise because before these comments, I would have jumped at a chance to open in Santa Ana if the rent was right, but now I’m thankful I did not. But then again, I guess Class A office buildings cater to the “higher end” crowd who don’t make such distinctions. Nevertheless, I now view Santa Ana in a much dimmer light due to the influence of my clients.
“The city name “Santa Ana” just doesn’t fly locally…”
thats why we have “South Coast Metro” :)
yeah but Santa Ana near John Wayne and Santa Ana ‘downtown’ are nowhere near each other. they’re like 8 miles apart.
No intelligent company is looking for office space in OC. Our entire economy is on life support via a government puppet show that will not last. Out of state commercial property brokers are working hard to close deals for California based companies looking to leave the state.The 2010 economy will be worse than 2009, as unemployment will grow, albeit at a slower pace.
what english has to do with losing your shirt ?
What English has to do with your comment???????
take your cash to your grave……….for the second life……
This is nothing for this company compared to this:
http://www.nytimes.com/2009/09/10/nyregion/10stuy.html
The Fosters commerial is going to be “That how you say Yankee Real Estate investment in Austrailian.”
It was also higly recommende by Alan Stanford, and “Lefty” Madoff.
How could it LOSE?!
desmo - you’re right on the money ($3.3 billion loss)
Commercial Real Estate Watch: Stuyvesant Town Set To Implode
Joe Weisenthal Oct. 14, 2009
http://www.businessinsider.com/commercial-real-estate-watch-stuyvesant-town-set-to-implode-2009-10
(excerpts): This one’s been in trouble for awhile, and now WSJ is reporting that the epic NYC apartment complex Stuyvesant Town is just months away from implosion.
The 56-building, 11,000 unit complex was acquired at the peak of the bubble for $5.4 billion by Tishman Speyer and BlackRock, with investors ranging from CALPERS (naturally) to the Church of England (not as obvious).
The property is now thought to be worth just $2.1 billion.
The buyers originally projected income would triple to $336 million in 2011, but right now it’s only at $139 million.
They’ve got just $33 million cash on hand from its interest reserves to cover its debt, and a burn rate of $16 million.
So basically: they’re screwed.
Clean up what? Only post news filtered with rose colored glasses?
Tom, there was a “rants” post and I will leave it at that…the administrator deleted it and rightfully so.
78% leased and cant make a go of it? Most buildings are completely vacant these days, entire office parks empty, weird. What happened to the long term growth? 2 years is not long term, whatever, who cares.
Dow is doing well because Wall Street believes that Obama will continue to bail out failed business models, as we’ve already seen of late. Soon America will be “too big to fail”…
A lot of these commercial buildings (with a lot of vacancies) would rather have multiple vacancies for extended periods of time rather than lower their prices.
jon, seriously…clean this up.
Translation: Your RE advertisers are not pleased with negative RE news, regardless if it reflects reality. Quickly insert positive “Buy now or forever be priced out” news.
Superfreakonomics, …how pimps are like realtors.