Japanese Firm Acquiring Building at 1000 Wilshire

A Japanese life insurance company is buying a nearly complete 21-story office building in downtown Los Angeles for $145 million cash, one of the highest prices ever paid for downtown office space.

The sale was announced on Wednesday by the building’s developer, the New York-based Reliance Development Group. The distinctive office building, at 1000 Wilshire Blvd., next to the Los Angeles Hilton, is still under construction and is expected to be completed in March.

Although the purchaser was not formally identified, several sources close to the transaction said the buyer is Sumitomo Life Insurance, a unit of Sumitomo Group, the far-flung Japanese conglomerate.

Sumitomo, and other large Japanese life insurance companies, have recently spent millions acquiring prime real estate around the United States because the return on investments in U.S. real estate is generally higher than they can make in Japan.

Shuwa, a Japanese real estate firm, acquired the Arco Plaza, with its twin 52-story towers, last summer for $650 million. Last month, a subsidiary of Mitsui Real Estate acquired the Exxon Building in New York’s Rockefeller Center for $610 million.

The purchase of 1000 Wilshire is believed to be Sumitomo Life’s first commercial real estate investment in Los Angeles. The Japanese insurer has been active in other areas, however. It recently paid $38 million for an office park outside Boston in which the headquarters of computer maker Wang Laboratories is located.

The 1000 Wilshire building is said by architects to be in the “post modern” style. Its ends are rounded, and its exterior is a pattern of sharply contrasted light and dark areas.

Sumitomo is paying well above the usual market price for Los Angeles office space, about $322 a square foot. Office space in downtown Los Angeles is generally sold at prices ranging between $250 and $300 a square foot.

Henry A. Lambert, president of Reliance Development, said the company expects to report a profit of $20 million before taxes on the sale. He said Reliance will manage the building, which is 80% leased, for the next six years. Among the tenants that will be moving into the office building this year are Coast Savings and the accounting firms of Main Hurdman and Touche Ross. Reliance Development is a unit of Reliance Group Holdings, which is controlled by New York investor Saul P. Steinberg.