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The intriguing story behind who will take control of the 92-acre Ziggurat facility—one of the largest pieces of prime real estate in South County—took a strange turn last week.
The winning bidders, Jeff Pintar of San Juan Capistrano-based Pintar Investment Co. and Cameron Hildreth of Signal Hill-based Hilco Development Services, placed a 10% deposit, or $17.7 million, on the federal government facility after winning in October the dramatic back-and-forth auction.
Now, they need to come up with the remaining $160 million when the escrow is slated to close around April 24. In January, Pintar told the Business Journal he and Hildreth had “solicitations from several” potential capital partners.
The Business Journal has learned that the losing bidder was Newport Beach-based Hoag Memorial Hospital Presbyterian—and its officials weren’t happy about coming in second place.
The second largest hospital system in Orange County in November sued the federal agency overseeing the auction, General Services Administration, alleging that Pintar was colluding in direct violation of auction rules.
Hoag, which has desires to expand its south OC footprint, complained that it was contacted several times by Pintar, who wanted to cut a deal, according to the suit filed in November.
“Pintar asked if Hoag wished to ‘work together instead of against each other,’ and invited Hoag to ‘sit and make a deal’ to bring the auction to an end,” according to the complaint.
“Hoag, realizing the impropriety of the collusion request, refused the improper overture.”
The lawsuit alleged Pintar’s actions were against the auction’s rules and he should have been disqualified from further bidding. GSA’s failure to disqualify Pintar, per the lawsuit, “significantly prejudiced Hoag.”
The hospital had asked the federal court to prevent the GSA from awarding the Ziggurat property to the Pintar group.
The Business Journal has learned that Hoag asked for a dismissal of the lawsuit, which was granted by a judge on March 20.
Executives from Hoag, Pintar and Hilco declined to comment for this article. A GSA spokesperson told the Business Journal that the agency has not closed the transaction on the building. “GSA can not confirm the identity of the purchaser or their plans for the property.”
Multi-Billion Development at Stake
The $177 million sale price implies a $1.9 million cost per acre, a relative bargain compared to properties that typically sell for $4.6 million an acre in South County and upwards of $6 million an acre in Irvine.
Pintar, earlier this year, told the Business Journal that he would be able to pay the remaining $160 million by the April 24 deadline.
A GSA spokesperson in November told the Business Journal that if the winning bidder fails to close escrow and pay off the final bid price, the deposit is forfeited and the federal agency “will consider other options to re-sell the property.”
If the Pintar bid falls through, Hoag may be ready to step in to buy the complex. The hospital certainly expressed an interest last year in the bidding.
The South County Healthcare Race
A race is currently ongoing among healthcare providers to expand into southern Orange County, particularly since MemorialCare closed its hospital in San Clemente in 2016.
Providence Mission is spending $712 million to build a new hospital in Mission Viejo as well as large clinics in Rancho Mission Viejo and San Clemente.
Hoag, which reported $1.7 billion in revenue for the year ending Sept. 30, is spending $1 billion to expand its facilities in Irvine.
South Orange County is already in Hoag’s plans, with the hospital spending about $20 million to open a 20,000-square-foot health center in San Clemente.
Hoag Health Center San Clemente, as the new facility is called, is on pace to open in Orange County’s southernmost city in July and would offer healthcare services in primary care, urgent care, obstetrics and gynecology, orthopedic and sports medicine, radiology and imaging, among other services.
Hoag already has facilities in Trabuco Canyon, Foohill Ranch and Dana Point.
Robert Braithwaite, Hoag’s chief executive, has previously said the hospital’s ultimate plan is to have one of its healthcare facilities within 10 minutes of every Orange County household.
Hoag’s chairman is Robert Brunswick, co-founder of Buchanan Partners, a Newport Beach-based real estate investment management firm that has invested in over $8 billion of real estate debt and equity investments.
Five-Month Bidding War
Bidding for the complex began at $70 million last June among three bidders. After one bidder dropped out, Hoag and the Pintar group went back and forth, bidding almost every day between June 5 and Oct. 24. Each new bid had to be a minimum of $300,000 higher. By the time Pintar won, a total of 157 bids had been submitted in an auction that participants described as similar to an Ebay bidding contest.
Shifting from Pintar and Hildreth to Hoag would dramatically alter the Ziggurat property’s potential redevelopment plans.
Pintar and Hildreth suggested they would pursue a mixed-use development with office, residential and retail buildings. They also previously told the Business Journal that they’re open to developing a hospital on the property with the right partner.