Blue Cross Sells Woodland Hills Headquarters

Blue Cross of California, the financially ailing health insurance organization, said Friday that it sold its headquarters in Woodland Hills for $90 million to an affiliate of JMB Realty, a giant Chicago real estate investment firm.

Blue Cross said it will lease back the 14-story building in the Warner Center area from JMB under a 15-year agreement and will continue to own about 25 acres of prime development land near the building.

Sources involved in the negotiations and representatives of other bidders said Shuwa Investments, a large Japanese real estate investor, was close to buying the building this fall for $110 million in a deal that would have required substantially higher rent payments from Blue Cross.

But Blue Cross President Leonard D. Schaeffer said Shuwa was one of eight companies that Blue Cross had seriously negotiated with for sale of the building. He said Shuwa gave no reason for dropping out, and Shuwa officials did not return telephone calls seeking comment.

For Blue Cross, the building sale is part of a major program to sell assets in what has been a troubled year for the nonprofit organization. It is also trying to sell an affiliate, the Take Care health maintenance organization in Oakland.

In the quarter ended Sept. 30, Blue Cross lost $30.9 million, raising its loss for the year to $97.8 million.

Blue Cross has blamed its problems largely on medical cost increases. Some published reports earlier this year suggested that Blue Cross might be close to insolvency, but the company and state insurance officials have strongly denied it.