BIRTCHER ANDERSON: Sales Record With Medical Offices

By Mark Mueller
Orange County Business Journal Staff

Birtcher Anderson Realty LLC, the real estate developer and investor, plans to buy more than it sells in 2007, primarily in Southern California, Phoenix and Las Vegas.

That said, "It's still a seller's market," said Chief Executive Bob Anderson, who started the San Juan Capistrano company along with industry veteran Arthur Birtcher.

Proof of that can be seen in Laguna Hills, where Birtcher Anderson and partner BayNorth Equities of Boston just cashed out on a big deal, setting a local sales record.

The two just sold Laguna Hills Square, a four-building medical office center totaling 51,734 square feet. The complex is near Paseo de la Valencia and Medical Center Drive.

Laguna Hills Square sold for $20.7 million. That's $400 per square foot, and about $7 million more than what Birtcher Anderson and BayNorth paid for it just two years ago.

The new owner is Universal Properties LH Five LLC, a Newport Beach-based buyer of medical offices in Orange County and Detroit.

The offices sold at a 5.9% capitalization rate. The per-square-foot sales figure breaks a record for commercial buildings 20,000 square feet or larger in South Orange County, according to broker Mike Randall of the Newport Beach office of Grubb & Ellis Co.

Randall and colleague Ryan Gallagher represented Birtcher Anderson. Brian Garbutt of Lee & Associates Commercial Real Estate Services Inc. in Newport Beach represented Universal Properties.

A lack of nearby land to build on helped drive the price of Laguna Hills Square. So did lease extensions for key tenants, which include Saddleback Medical Center, Harvard Eye Associates and Wachovia Bank.

Rents have gone from about $2.50 per square foot when Birtcher Anderson bought the offices to around $3.10 per square foot, Anderson said.

BayNorth "called us and asked 'why are we holding it? It's all leased up. Let's harvest it,'" Anderson said. The property management arm of Birtcher Anderson is being retained to run Laguna Hills Square, he said.

Birtcher Anderson made about $100 million in acquisitions last year, but sold more than it bought, Anderson said. Investors, especially those outside the region, have been more bullish on the area than many local players, he said.

This year, the goal for Birtcher Anderson is to buy and develop real estate valued at $200 million or more. Phoenix is becoming a bigger focus, especially on the development side. The company has office, industrial and retail projects planned there.

"Fundamentally, the market (in Phoenix) is even a little stronger than it is here," Anderson said.

by: Orange County Business Journal

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