New Water Garden Partner Found

Real estate investment company Colony Capital Inc. of Los Angeles has taken a 50% stake in a major office project planned for the popular eastern Santa Monica commercial district, paving the way for construction to begin.

Veteran Los Angeles developer Jerry Snyder, founding partner of J.H. Snyder Co., said Colony will join his firm and TransAction Cos. of Santa Monica in developing the $150-million second phase of the Water Garden. Plans for the long-delayed project include 600,000 square feet of high-quality office space near the intersection of Colorado Avenue and Cloverfield Boulevard, a district where strong demand from media and entertainment tenants has sent office rents soaring over the last two years.

Snyder said Colony’s investment and participation in the project will help the developers secure favorable terms on a construction loan, which he anticipates being arranged within 90 days.

Los Angeles-based Snyder, who completed the Water Garden’s first phase in 1991 in partnership with billionaire investor Marvin Davis, said the developers plan to start construction even though no tenants have committed to moving in. Recent leases in the neighborhood have surpassed $30 per square foot annually, he added.

Colony, a privately held firm headed by real estate investor Tom Barrack, came to terms on a $420-million agreement earlier this month to acquire a majority stake in the Harveys Casino Resorts operation.