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Two Office Properties Change Hands in Tight Kearny Mesa Submarket

San Diego’s Balboa Executive Center Part of Blackstone’s Prior $3.3B Portfolio Buy
August 1, 2018
Balboa Executive Center in San Diego, which was part of a major nationwide 2015 office portfolio acquisition, was recently sold by Blackstone Group.

Two prominent office properties have changed hands in San Diego’s tight, high-demand Kearny Mesa submarket, including Balboa Executive Center, which was part of a $3.3 billion nationwide portfolio acquired by New York-based Blackstone Group LP in 2015.

Blackstone recently sold the property at 9444 Balboa Ave. to New York-headquartered Admiral Capital Group for an undisclosed price. That 120,992-square-foot property was among 210 nationwide, including 23 in San Diego, purchased from GE Capital’s Arden Realty division.

CoStar data at the time of the 2015 deal put the allocated price of Balboa Executive Center at approximately $28.3 million, though GE Capital paid $43.8 million for the property in 2006.

Deal Summary:
Property: Balboa Executive Center
Address: 9444 Balboa Ave.
Size: 120,992 SF
Price: Undisclosed
Buyer: Admiral Capital Group
 Broker(s): In-house
Seller: Blackstone Group LP
 Broker(s): Rick Reeder and Brad Tecca - Cushman & Wakefield
CoStar COMPS #4457602
Deal Summary:
Property: Seville Plaza
Address: 5469 - 5473 Kearny Villa Rd.
Size: 140,107 SF
Price: $27.5 million
Buyer: Vista Investment Group
 Broker(s): In-house
Seller: LLJ Ventures
 Broker(s): Nick Frasco, Nick Psylos and Taylor Bergthold - HFF
CoStar COMPS #4461060

In a separate, off-market transaction in Kearny Mesa, Vista Investment Group of Santa Monica purchased the 140,107-square-foot Seville Plaza for $27.5 million from San Diego-based LLJ Ventures. The three-building, seven-acre property was originally built in 1981 at 5469, 5471 and 5473 Kearny Villa Rd.

This is the second recent San Diego acquisition for Vista Investment, following its September 2017 purchase of the Plaza 2020 office Building in Mission Valley for $25.1 million.

Vista officials said Seville Plaza is 93 percent leased and is anchored by San Diego County’s Health and Human Services Department. Recent improvements by the seller included updates to lobbies, common areas and signage.

Both of the acquired Kearny Mesa properties are located in a central San Diego neighborhood that has seen no new office construction deliveries in the past year, and where nearly all of the new inventory of the past decade was occupied by San Diego County government through its own development and pre-leasing arrangements.

CoStar Market Analytics data shows that Kearny Mesa’s office vacancy rate is 5.8 percent, well below the San Diego regional rate of 9.9 percent, and that rents have grown 5.4 percent over the past year. The neighborhood’s big corporate users include Jack in the Box Inc., which has its headquarters there, along with Bridgepoint Education, Northrop Grumman and Sharp HealthCare.

Brokers at Cushman & Wakefield, which represented the seller in the disposition of Balboa Executive Center, said the property was developed in 1988 and extensively renovated by its latest owner, including upgrades to its lobby, corridors, fitness center, furniture and landscaping. It was more than 98 percent occupied at the time of sale.

Admiral Capital Group, with offices in New York, San Antonio and Seattle, was co-founded by NBA Hall of Famer David Robinson, who is also a U.S. Naval Academy graduate, and former Goldman Sachs executive Daniel Bassichis. Admiral officials said the company purchased Balboa Executive Center in a partnership with an investment entity called Admiral2R Management, led by Andy Stone.

Among the world’s largest investment firms, Blackstone Group remains active in multiple real estate sectors, though during the past two years it has sold or placed up for sale several suburban office properties in markets including San Francisco, Los Angeles and Chicago. A spokesman for Cushman & Wakefield said the brokerage firm was not aware of any other San Diego properties from the 2015 portfolio acquisition currently being marketed by Blackstone.

Lou Hirsh, San Diego Market Reporter  CoStar Group   
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