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Highridge buys Santa Ana office building from Tishman Speyer

October 15, 2009|Roger Vincent

Los Angeles real estate investor Highridge Partners bought a Santa Ana office building Wednesday as it launched a program to purchase $500 million worth of commercial properties in California.

Highridge paid New York developer and landlord Tishman Speyer Properties $31 million for 3 MacArthur Place, an 11-story building completed in 1991 in the master-planned MacArthur Place development. Tishman Speyer paid $83 million for the building near the top of the real estate peak in 2007.

The office market, which has been in decline for nearly two years as rents and property values have fallen, is getting worse, said Jack Mahoney, executive vice president of Highridge. Yet the time has arrived when investors can acquire buildings with money-making potential, he said.

Mahoney calculates that the building will be worth more than what his company paid when the market recovers. His firm will now focus on finding more tenants, he said. The building is 78% leased to businesses such as Omnipoint Communications Inc. (part of T-Mobile USA Inc.), Tenet Health Systems and apartment investor Archstone-Smith.

Large commercial real estate transactions have been rare since the recession began because owners have been reluctant to sell in the declining market and would-be buyers have had difficulty arranging loans in the ongoing credit crunch.

Highridge, which sold most of its previous real estate portfolio around the mid-2000s for about $1 billion, has cash and is looking for motivated sellers, Mahoney said.

"When they have assets they immediately need to sell, then we are as a good a buyer as they can get," he said.

Highridge is a privately held real estate investment company founded in 1978 by John Long, who describes himself as a contrarian investor.

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roger.vincent@latimes.com

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