Cress Capital Buys Distressed SoCal Office for $41M

A troubled Orange County, Calif., office property has traded hands for far less than its previous sale prices, just a few months after its former owner defaulted on debt tied to the building.

Newport Beach-based investment firm Cress Capital paid $41 million for the 10-story, 214,858-square-foot office, at 1301 Dove Street in Newport Beach. The property, dubbed 1301 Dove, was built in 1980 and underwent an $11.5 million renovation in 2018. The Orange County Business Journal first reported news of the deal, citing CoStar data. 

The property’s recent ownership history is complex. A joint venture between Ocean West Capital Partners and Rockwood Capital purchased the Class A office from PGIM in 2021 for $64 million, roughly $8.3 million less than what PGIM paid to acquire it in 2015. The JV landed a $60.6 million loan from Western Alliance Bank at the time to finance the deal, yet defaulted earlier this year on about $41.7 million in outstanding debt, according to property records.

The JV handed the keys to the lender in June, via a deed in lieu of foreclosure. Western Alliance subsequently sold the office to Cress for roughly the same amount as the unpaid debt. The sale price is the second consecutive bargain for the property, given its distress.

Representatives for Cress and Western Alliance did not immediately respond to requests for comment. 

Other Orange County offices have traded at a hefty discount lately. ParkTerra and Jen Partners in July paid $62.5 million for Axis, a five-building business park in Anaheim, about 25 percent less than the Pendulum Property Partners paid for it in 2018. Meanwhile, New York Life Insurance in January sold an 11-story office in Irvine for just $37 million, less than half of the $82.5 million the firm paid for it in 2015.

Nick Trombola can be reached at ntrombola@commercialobserver.com.