What do financially-troubled major firms, including banks, do when they are short of cash?
They rely on good old real estate to bail them out, that’s what.
In bad times, it would be like selling the back 40 or the ranch or the old homestead.
Overnight, the embarrassed giants become tenants in the prestigious towers they had built during better times. After the initial shock wears off, they start making monthly payments to the landlord, like any good tenant.
But at least they don’t have to change the address on their stationery.
Of late, a number of major companies caught in various financial binds have helped alleviate their immediate problems by selling their headquarters buildings.
It’s a little mind-boggling to describe the giant Bank of America as beleaguered, but it is involved in selling its headquarters tower in San Francisco and is looking for a customer to buy its principal Southern California offices in Arco Plaza.
Security Pacific Corp., and Fluor Corp., to name two other Southland organizations, sold their headquarters on Bunker Hill and in Irvine, respectively, last year.
The former, parent of Security Pacific National Bank, in a $310-million transaction, sold its 55-story, 3-million square foot structure at 333 S. Hope St. last summer to Metropolitan Life Insurance Co. Last fall, Fluor, the engineering and construction firm, sold its corporate offices and 162 acres to Dallas-based Trammell Crow Co., commercial realty development firm, for $340 million.
The Bank of America’s Arco Plaza neighbor, Atlantic Richfield Co., points out discreetly that it is not in a cash bind but is party only to selling the Arco Plaza, the twin 52-story towers which are among downtown’s first generation of high-rise offices. It opened in 1972 for an announced cost of $140 million--a retrospective pittance.
Arco and the bank each owns 48% of the 2.4-million-square-foot (leaseable) complex bounded by 5th, 6th, Figueroa and Flower streets, and with a Radio Corp. of America subsidiary, make up the partnership of Flower Street Ltd. Last week, the partnership announced its selection of two New York-based firms, Eastdil Realty Inc., and First Boston Real Estate to find a buyer for Arco Plaza.
Neither the oil company--12th ranked among the nation’s industrial giants--nor the bank--the kingpin for years but now second in assets to Citicorp in the realm of banking--plan to move; they’ll remain as tenants.