Tallest Building in San Diego, Symphony Towers Project, Sold
Symphony Towers, a full-block project that includes San Diego’s largest office building and a 264-room hotel being built around Symphony Hall, was acquired Tuesday for $164 million by a group headed by a British real estate development and investment firm.
A partnership controlled by London & Edinburgh Trust acquired the 1.1-million-square-foot project from Guy F. Atkinson Co., a San Francisco general contracting firm that took it over from Charlton Raynd Development of San Diego in September. Charlton Raynd is a limited partner in the new ownership entity.
Construction of Symphony Towers’ 34-story office building, the 534,000-square-foot centerpiece of the property, is due to be completed in March. The adjoining tower, also under construction, is scheduled to open in January, 1990, and will be operated by Marriott Corp. as an all-suites hotel.
Through the use of giant cantilevers, the project is being built around and over the former Fox Theater, now the property of the San Diego Symphony. Douglas P. Wilson, a Charlton Raynd partner, said Tuesday that the symphony’s arrangement to receive 1 cent per square foot per month of all lease revenue generated by the office tower during its first five years of operation will not be affected by the sale.
Atkinson, the parent company of the project’s general contractor, Walsh Construction, took control of the project in September after Charlton Raynd was unable to come up with between $6 million and $7 million in equity capital to cover cost overruns, project officials have said.
Charlton Raynd, however, kept an option to buy back the property until a Jan. 1 deadline. The firm joined forces with London & Edinburgh Trust, a publicly owned company based in London, and formed Knightsbridge Associates partnership to reacquire the project from Atkinson.
The project’s financial problems and internal squabbles caused a six-month stoppage of construction on the 24-story hotel portion of the project before work finally resumed last month.
London & Edinburgh Trust set up a U.S. investment and development operation headquartered in San Francisco in 1984. Since then, it has become involved in five U.S. projects, including a $60-million, 26-story office building in San Francisco called 235 Pine Street that it is developing in partnership with the C. Itoh trading company of Japan.
A public company whose shares are traded on the London Stock Exchange, London & Edinburgh Trust is also developing a mixed-use project in Atlanta called Hartsfield Center that will include 700,000 square feet of offices and a 400-room Stouffer Hotel. The company also owns commercial real estate in Chicago and Waltham, Mass., said Charles Graham, executive vice president of the company’s U.S. subsidiary, L&E; Investment Inc.
Graham said London & Edinburgh Trust was drawn to Symphony Towers by the “quality of the project” and favorable economic conditions in San Diego County, particularly population growth.
“We think it’s an exciting growth market if you look at population trends, quality of life and the climate,” Graham said. “We think San Diego is overlooked (as a magnet of foreign real estate investment) compared with downtown San Francisco and Los Angeles.”
Wilson said London & Edinburgh Trust was selected over other interested investors, including Beta West, the real estate investment arm of U.S. West, the Denver-based telephone utility.
London & Edinburgh Trust received some unfavorable publicity earlier this year when Prince Charles criticized the proposed design for a redevelopment project built on the site of London’s historic vegetable market. London & Edinburgh Trust is leading a consortium of British builders handling the project.
Using current exchange rates, London & Edinburgh Trust listed assets of $940 million as of December, 1987. Profits for fiscal 1987 were $43.2 million on revenue of $283.5 million, Graham said.
David Walters, a vice president with California First Bank, the lead bank in a syndicate that made the $124-million construction loan for Symphony Towers, said the deal was put together in 30 days, the fastest transaction of this magnitude he has ever been involved with.