Koll Management Fails to Buy Tishman West : Mergers: Balcor Co. of Chicago steps in to buy the remainder of Los Angeles-based real estate manager, scuttling plans by the Newport Beach-based company.

Koll Management Services Inc., the nation’s fourth-largest commercial real estate manager, said Friday that a proposed deal to buy its competitor, Tishman West Cos., has fallen through.

Los Angeles-based Tishman West is being purchased instead by its partner, Balcor Co. of Chicago.

Balcor, a subsidiary of American Express Co., said that it decided Thursday to exercise its option to purchase the remaining 50% ownership of Tishman West, ending a proposed Koll-Tishman merger that was first announced in July.

“We obviously are very disappointed,” said Koll Management spokeswoman Linda Lane. “We were a perfect match. They’re in the same locations that we’re in. We had the same kind of image.”

Lane said that a merger with Tishman West, the developer and manager of the giant The City shopping center and office park in Orange, would have formed a giant management company, managing more than 60 million square feet of commercial space.

Bill Durslag, senior vice president of Tishman West, said that his company was pleased by the outcome, but added that a merger with Koll would have been just as profitable for his company.

“For us, it was almost a can’t-lose proposition,” Durslag said. Tishman West has been seeking to be bought out in order to remain stable in the unsteady real estate market.

“The feeling was that bigger is a little bit better. We thought that affiliating ourselves was the best for stability,” Durslag said.

Tishman manages office buildings and complexes across San Diego County, including the Bank of America building in downtown San Diego, the Tishman-Hurst Town Centre in La Jolla, and the Centerside One building in Mission Valley.

Balcor and Tishman West have been equal partners in a joint venture signed in 1988, with each firm owning half interest in the other.

The deal to merge Koll Management and Tishman West was contingent on Tishman West buying Balcor’s stake in the joint venture and Koll Management then purchasing Tishman West, Durslag said.

But under a buy-sell clause in the joint venture, Balcor decided that Tishman West was too valuable to lose, Durslag said.

“This gives (Balcor) an entry into the West in a big way,” Durslag said. “They see it as a great way to expand.”

Koll’s Lane said officials at the Newport Beach company knew that there was the possibility Balcor would exercise its buy option.

She said that despite the setback, the company will continue its strategy of acquiring smaller real estate management entities to remain profitable in the future. She said the firm is negotiating to buy out about 10 other companies.

“We are going forward,” she said.

Koll Management closed at $12.50 a share on the NASDAQ market, unchanged from the previous day’s closing.