Group Led by Eastern Investors Acquires Pacific Design Center

West Hollywood’s landmark Pacific Design Center has new owners--a group headed by Charles S. Cohen of New York and a real estate investment fund managed by Cheslock Bakker & Associates, based in Stamford, Conn.

The new owners plan to retain the 16-acre PDC’s original Cesar Pelli-designed “Blue Whale” structure at Melrose Avenue and San Vicente Boulevard as a home furnishings mart catering to the trade, but they will convert the adjacent Center Green building into traditional office space.

Saddled with about $200 million in mortgage debt--exceeding the property’s market value--the PDC’s longtime owner, Catellus Development Corp., agreed to relinquish the property after talks with its mortgage lender, according to Catellus Chief Operating Officer Steve Wallace.

Catellus, a publicly traded real estate company headquartered in San Francisco, held a 74% stake in PDC, with an affiliate of New York’s Worldwide Holdings controlling most of the balance. Pension giant Teachers Insurance & Annuity Assn. held about $200 million in mortgages--the bulk of it funded in 1986, when such stores for resale goods were more popular.

The teachers pension fund will reportedly finance $120 million toward the Cohen/Cheslock Bakker team’s undisclosed purchase price. The new owners said their total investment, including “improving and repositioning” the property, will be about $200 million. Los Angeles-based Cushman Realty Corp. brokered the transaction.

Cohen, president and chief executive of Cohen Bros. Realty Corp., has an extensive New York office building portfolio. Cheslock Bakker specializes in real estate “problem solving and financial engineering,” according to company materials.

Catellus reported net income of $17.8 million, or 16 cents a diluted share, for the quarter ended June 30, down from $11.8 million, 11 cents a share, in the year-earlier period. Its shares hit a 52-week low of $10.94 earlier this month.

Its shares were up 6 cents on Wednesday, closing at $11.25 on the New York Stock Exchange.