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Maguire to Buy Former Fluor Headquarters Campus in Irvine

California

The $260-million purchase would expand the tycoon's real estate holdings into Orange County.

February 11, 2004|Roger Vincent | Times Staff Writer

Making his first foray into Orange County, Los Angeles real estate tycoon Robert Maguire said Tuesday that his company was purchasing the former Fluor Corp. headquarters campus in Irvine for $260 million.

Maguire is buying the complex, now known as Park Place, from an affiliate of Blackstone Real Estate Advisors, which purchased the 15-acre property at Jamboree Road and the San Diego Freeway in 2002 for about $200 million.

The 1.7-million-square-foot compound, built in 1978, once served as the headquarters of engineering giant Fluor and consists of interconnected buildings, including a 10-story, hexagonal tower that is a local landmark. The futuristic-looking campus appeared in the 1991 Albert Brooks movie "Defending Your Life."

The complex is 96% leased. Its major tenants include ConAgra Inc., the California Department of Transportation, Washington Mutual Inc., State Farm Insurance Cos. and Cingular Wireless.

Maguire Properties will pay about $150 a square foot for Park Place in a deal that should close within a month. That compares with recent comparable office sales of $225 a square foot in Irvine and an estimated cost of $250 a square foot to build Park Place today, Chairman Robert Maguire noted, adding: "That's very attractive pricing."

Maguire Properties may try to acquire and develop land near Park Place that has been approved for residential, office or retail construction, the chairman said.

Los Angeles money manager Craig Silvers of Bricks & Mortar Capital, who does not own stock in Maguire, called the Park Place acquisition "huge." Wall Street, he said, "is going to react very positively" to Maguire's move into Orange County.

Most of Maguire's office buildings are in one market, Bunker Hill in downtown Los Angeles. The 7.1-million-square-foot office portfolio was 91% leased at the end of the quarter, down slightly from 93% a year ago and 92% in September. The company also owns the 350-room Westin Pasadena hotel.

Also on Tuesday, Maguire reported a fourth-quarter profit of $8 million, or 19 cents a share. The results were only the second full quarter of financial data since the Los Angeles real estate investment trust went public in June.

Revenue for the period ended Dec. 31 totaled $70.2 million. Income from operations, a key measure of profitability for REITs, was $21.2 million, or 50 cents a share, beating Wall Street's estimate by 3 cents a share. Year-earlier numbers are not comparable because the company's structure changed dramatically when it went public.

A REIT allows individual investors to participate in large real estate ventures.

Maguire Properties raised $250 million by selling 10 million shares of preferred stock last month. Further property acquisitions are planned, Maguire said.

Shares of Maguire Properties closed down 43 cents at $24.25 on the New York Stock Exchange before fourth-quarter results were announced.

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