Beacon Capital Acquires Citicorp Center
A Boston investment company said Friday that it had acquired Citicorp Center, one of Los Angeles’ signature skyscrapers, for more than $170 million.
The 48-story tower at the northwest corner of Flower and 5th streets, home to such blue-chip tenants as banking giants Citigroup Inc. and Wells Fargo Co., is probably best known as the fictional headquarters of a law firm featured in the Emmy-winning television series “L.A. Law” that ran for eight seasons in the late 1980s and early ‘90s.
For the record:
12:00 a.m. Nov. 26, 2003 For The Record
Los Angeles Times Wednesday November 26, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 56 words Type of Material: Correction
Downtown office tower -- An article in Saturday’s Business section about the sale of an office tower at 444 S. Flower St. in Los Angeles incorrectly identified the building as Citicorp Center. It is Citigroup Center. The property is on the northeast corner of Flower and 5th streets, not the northwest corner, as the article said.
Beacon Capital Partners bought the property in two separate deals that closed this week. It had been co-owned by Meiji Seimei Realty (USA) and Grosvenor USA Ltd. The stainless-steel-skinned structure was designed by Los Angeles archi- tecture firm A.C. Martin & Associates and developed in 1981 by the Rockefeller Group.
Beacon, whose holdings include BP Plaza downtown, outbid several institutional investors, including real estate investment trusts, to acquire the property at a price Beacon’s Jeremy Fletcher considers a bargain.
“We are buying an asset for under $200 a square foot that would cost more than $350 a foot to replace,” said Fletcher, the company’s chief executive of the Western region.
“We think it is a compelling value for our investors,” he said.
At about $190 a square foot, the cost is far below the record for a downtown building set earlier this year of $240 a square foot paid by Mani Bros. for 801 Tower on Figueroa Street.
Other recent downtown office purchase prices have included $190 a square foot for BP Plaza, $172 a square foot for Union Bank Plaza and about $200 a square foot for KPMG Tower, according to real estate data tracker CoStar Group.
Two-thirds of Citicorp Center’s nearly 900,000 square feet is under long-term lease to Citibank, Wells Fargo and British oil company BP. Wells Fargo and BP have subleased most of that, said real estate broker Richard Plummer of Cushman & Wakefield, who represented Grosvenor in the deal with his partner David Hasbrouck.
The building is 95% occupied. Other tenants include investment firm Salomon Smith Barney, law firm Parker Stanbury and the Los Angeles County Economic Development Corp.
Beacon also owns co-owns 10 Universal City Plaza in Universal City with CarrAmerica Realty Corp. Beacon executives hope to buy more property downtown, Fletcher said.
Average office vacancy in the city’s central business district rose slightly in the third quarter to 19.6% from 18.7% a year ago, Cushman & Wakefield said, but average monthly rents rose to $2.06 from $1.99.
Cushman broker Plummer predicts that downtown will show a net gain in occupancy this year with City National Bank’s signing of a 310,000-square-foot lease in Arco Plaza this week and other pending agreements.
The Beacon purchase, Plummer said, “reinforces the idea that institutional capital believes downtown L.A. has turned around and will continue to improve as an office center.”
