Westside’s MTV Building Sold
Dot-com distress on the Westside notwithstanding, a real estate firm representing German insurance companies completed its purchase Monday of Santa Monica’s “MTV building” for about $105 million.
The price TWM Real Estate Group paid for the renovated former Tenet Healthcare/National Medical Enterprises headquarters--more than $350 a square foot--indicates that institutional investors remain willing to pay top dollar for prime commercial properties leased to stable tenants.
In recent months several Internet and technology companies have vacated office space in and around the eastern Santa Monica neighborhood dubbed the Professional and Entertainment District. However, the five-story, roughly 300,000-square-foot complex at 2700 Colorado Ave. housing Viacom Inc.’s MTV group and other tenants has remained full.
As the Santa Monica-based M. David Paul Co. real estate firm and its investment partners renovated the former health-care company headquarters, they avoided financially unproven dot-com tenants.
In addition to MTV--the property’s biggest tenant at more than 100,000 square feet--the complex houses Artisan Entertainment and the J. Paul Getty Trust. Its only truly high-tech tenant: Microsoft Inc.
The property’s no-vacancy status, quality tenant roster and prime location were more than enough to counter short-term market fallout from the technology downturn, said Atlanta-based TMW investment officer Zeb Bradford.
“There are some sublease problems in the area today,” Bradford said, “but we feel pretty good about the long-term prospects for that stretch along Colorado.”
TMW has acquired several high-profile office buildings in metropolitan areas for its German institutional clients.
Earlier this year the company purchased an interest in Manhattan’s famed Chrysler Building. TMW also bought the 125,000-square-foot Beverly Mercedes Place in Beverly Hills when local property values were depressed in the mid-1990s.
The Santa Monica deal represents the first acquisition by TMW’s latest investment fund, which plans to purchase as much as $1.5 billion in Class A multitenant U.S. properties over the next 30 months, Bradford said, adding that Los Angeles, San Diego and San Francisco are prime targets for additional acquisitions.
Having essentially completed its “value-added” strategy at the Colorado Avenue property, the M. David Paul group hired the investment brokerage team headed by Steve Silk and Jay Borzi at Secured Capital Corp. to sell it. Brad Feld of Cushman & Wakefield, the property’s leasing agent, also participated in the sale.
M. David Paul principal Jeff Worthe said his company will continue to oversee property management under the new ownership.
M. David Paul has other value-added developments underway, especially in Burbank. It is transforming a former Lockheed property near the Burbank airport into a multitenant office park, and is building the first phase of the Pinnacle office development in the heart of the city’s Media District.
