Landmark II Tower Joins Roster of Westside Deals
A client of locally based Douglas Emmett Realty Advisors is acquiring the 17-story Wilshire Landmark II tower in Brentwood for between $125 million and $130 million, continuing the noteworthy recent string of Westside office building sales, sources familiar with the deal said.
The sale of the 373,000-square-foot high-rise, expected to close this week, is the latest acquisition involving a high-profile office building in the fast-recovering Westside market. It also brings another “trophy” property into the Douglas Emmett portfolio, which includes a bevy of prominent local buildings acquired by the Brentwood-based institutional investment manager over the last four years.
Other well-known Westside office properties trading hands during the last year or so include Century Plaza Towers, MGM Plaza (twice), Century City North, the “sister” Saban Plaza and Oppenheimer towers in Westwood, the Sony building and, most recently, Fox Plaza. Investment specialists say they expect more deals to follow.
The sale is another indication of “the ongoing strengthening of the Westside office market,” said Richard Plummer, an office investment specialist with big commercial real estate brokerage Cushman & Wakefield Inc. The recovering economy, with entertainment leading the way, has generated “pent-up demand, with limited options for tenants” in a market that’s seen almost no new office construction since 1991.
Rents and property values will almost certainly continue rising until the Westside sees substantial additional development, Plummer said.
Citing confidentiality agreements, executives at Douglas Emmett declined to discuss the pending acquisition. Representatives of sellers Hines Interests and Morgan Stanley, Dean Witter, Discovery & Co. likewise declined to comment, ras did the brokerage said to be handling the sale, Greenwich Group International.
On behalf of its well-heeled roster of institutional clients, the publicity-shy Douglas Emmett group now owns, manages and leases one of the L.A. area’s biggest portfolios of modern office buildings.
The firm, headed by veteran real estate investor Dan Emmett and initially including residential broker Jon Douglas, was among the few to assume an aggressive “contrarian” approach as the severe recession lingered during the early 1990s when more traditional buyers were essentially “redlining” Southern California commercial real estate.
Investment funds managed by Douglas Emmett acquired Studio Plaza in Burbank and the Nestle building in Glendale, as well as several Westside towers, including Village on Canon in Beverly Hills, First Federal Square in Santa Monica and several Brentwood buildings. Earlier this year, the firm acquired the famed Sherman Oaks Galleria mall.
Sources said a portion of the capital Douglas Emmett is investing into the Landmark II tower comes from its recent sale of MGM Plaza. Developer Rob Maguire had secured an option to repurchase that low-rise complex--at a price reportedly guaranteeing a return to Douglas Emmett of $30 million or more--when Douglas Emmett took control of the property from a Maguire-led partnership a year ago.
As the Westside market recovered quickly over the last two years--with vacancies falling and rents rising--other aggressive investors joined the chase and began acquiring top buildings.
A source close to the Landmark deal noted that while other contrarian buyers have backed off as more aggressive capital has entered the Westside office market, Douglas Emmett was willing to make an aggressive offer in order to maintain its dominance of the Brentwood sub-market.
The price the Douglas Emmett fund is paying for the 1990-vintage building factors to about $320 per square foot (including retail space)--less than the $350-plus per foot that investor Marvin Davis paid for the Fox Plaza tower in Century City last week but still a level reflecting optimistic expectations for the Westside market, Plummer said.
The granite-clad Landmark II, at 11766 Wilshire Blvd., is nearly 100% leased, with rents topping $30 per square foot in the most recent lease transactions.
The tower was among the last of the wave of office buildings launched in the high-flying mid- and late 1980s and followed the 1986 completion of the “sister” Landmark tower, now owned by clients of Westmark Realty Advisors.
