Bass Group Buys 2 Buildings in Irvine in $40-Million Deal

IRVINE —  In a deal estimated to be worth more than $40 million, Newport Beach developer Hillman Properties sold two buildings near John Wayne Airport to a partnership including billionaire Robert M. Bass.

The partnership is leasing most of the space in the buildings--about 234,000 square feet--to Bass’ American Savings Bank. In terms of size, the lease is the third-largest ever signed in Orange County.

American, one of the nation’s biggest thrifts with $16.3 billion in assets, finished moving 500 people into the buildings last week from offices in Whittier, Sherman Oaks, Fullerton and elsewhere in Irvine.

The thrift’s corporate headquarters, most of its employees and back office operations--such as data processing--remain in Stockton. But most of the thrift’s administrative operations and its lending, retail banking, finance and legal functions are located in the new Irvine offices.

Both Hillman and American Savings declined Wednesday to reveal the purchase price. But real estate brokers said it was probably between $40 million and $50 million, based on the prices that buildings of similar size are fetching in the area.

The two buildings are part of Hillman’s 68-acre Irvine Plaza project at Von Karman Avenue and Main Street, where the developer plans to build two more office towers of five and eight stories respectively, shops and condominiums.

The deal with American had long been rumored in the local real estate industry. Brokers speculated that Hillman probably would have preferred to keep the two buildings but that the terms of the sale to Bass were too attractive. In fact, in a release Hillman did not mention the sale and said only that American had leased the buildings from an unnamed landlord.

American officials, however, confirmed the sale. Hillman officials wouldn’t elaborate beyond a sketchy statement they released Wednesday.

The thrift does not need all 275,000 square feet in the two buildings, which were bought by an entity called RMB Irvine Plaza Limited Partnership, of which the Robert M. Bass Group is a member. About 41,000 square feet--most of it in a four-story building--would be leased to other businesses. The other building is a five-story structure.

American said the Bass Group checked with federal regulators who approved the lease arrangement between the thrift and its owner.

American was once the nation’s largest savings and loan, but bad investments and heavy losses got it in trouble with federal regulators in the 1980s. Bass, who has a reputation for shrewd investing, bought about 70% of the thrift in a controversial deal in 1988. Bass invested $400 million in American in return for lucrative tax breaks and other concessions.

Bass, an heir to Texas oil money whose net worth was estimated last year by Forbes magazine as at least $1.44 billion, directed the thrift to hire talented managers, who began cutting costs and consolidating operations. Last year, partly because of the concessions, the thrift earned $214 million.

Hillman, owned by Pittsburgh billionaire Henry L. Hillman, is one of the nation’s 20 largest real estate developers. Hillman Properties, which--like Bass’ companies--is privately held, plans a $1-billion project including offices, shops and a hotel on the site of the Unocal building in downtown Los Angeles.

The largest known office lease in terms of space in Orange County was Western Digital’s lease of 380,000 square feet from The Irvine Co. at the giant Irvine Spectrum office and industrial park. The second-largest is the Taco Bell building in Irvine, where Taco Bell leases 260,000 square feet.

An American spokesman said the length of the thrift’s lease and the rent it is paying Bass were not available Wednesday.