Blackstone Sells Santa Ana Offices for 36% Loss

Blackstone has sold two office towers in Santa Ana for 36 percent less than they paid nearly a decade ago.

A joint venture between Barker Pacific Group and Kingsbarn Realty Capital bought the 560,000-square-foot Griffin Towers at 5 and 6 Hutton Centre Drive, according to an announcement on Thursday. A team led by Newmark’s Kevin Shannon and Paul Jones brokered the deal on behalf of seller Blackstone, while Newmark’s David Milestone and Henry Cassiday worked on debt financing for the buyer.

The buyers did not disclose a price, but the two, 13-story towers sold for $82 million, or about $146 per square foot, according to a source familiar with the matter.

Blackstone had bought the office towers for $129 million in 2014, according to an announcement at the time. The deal was reportedly the largest commercial sale to close in Orange County that year.

The investment firm bought the property from Lincoln Property Company and Angelo Gordon, who themselves bought it for $89.9 million in 2010, county property records show.

Blackstone’s sale puts office values in Orange County lower than what they were in 2010, when the market was reeling from the 2008 financial crisis.

About 24 percent of the buildings’ space is available for lease, according to a listing on LoopNet. That’s slightly better than the 27 percent average availability rate across office buildings in South Santa Ana during the fourth quarter of last year, according to a Kidder Mathews report.

With the acquisition, Barker Pacific now owns more than 3 million square feet of commercial space. The firm also owns 626 Wilshire Boulevard, a 12-story office building in Downtown L.A., which it bought for $15 million in 2004, records show.

Blackstone’s recent moves suggest the firm is pulling back from Southern California office exposure. At the end of March, the firm and a consortium of other investors sold a 250,000-square-foot, entirely vacant office building at 9911 Pico Boulevard between Century City and Beverly Hills.