Deal Is Near on Office Complex
Real estate investment trust Equity Office Properties Trust is expected to announce as early as next week that it has agreed to purchase the Colorado Center office complex in eastern Santa Monica for about $450 million.
Negotiations are nearly complete on a deal that would give the REIT headed by real estate mogul Sam Zell and TIAA-CREF, the New York pension fund, title to the six-building, 15-acre property, real estate sources said. The complex is currently owned by New York-based Tishman Speyer Properties.
Principals in the deal and listing brokers at Secured Capital Corp. of Los Angeles declined to comment.
The 1.1-million-square-foot complex at Colorado Avenue and Cloverfield Boulevard was built in phases beginning in the early 1980s and is about 80% leased. Major tenants include advertising agency Rubin Postaer & Associates, cable broadcaster HBO, Internet security provider Symantec Corp. and the home entertainment division of Metro-Goldwyn-Mayer Inc.
The property was called MGM Plaza for several years, until the company moved its headquarters to Century City in 2003.
Tishman Speyer bought the complex in 2000 from the Los Angeles company now known as Maguire Properties for about $360 million. Tishman made $24 million worth of improvements that included transforming the mostly concrete central courtyard into a lushly landscaped corporate campus and public park.
The Westside is Los Angeles’ largest office market, and it is showing signs of life after struggling through the collapse of the Internet bubble and the recession that began in 2001.
The average vacancy rate in Santa Monica during the second quarter was 16.4%, down slightly from 17.5% a year earlier, according to real estate brokerage Cushman & Wakefield.
Rents still are under pressure and slipped 2 cents in the second quarter to an average of $2.90 per square foot per month. Landlords were able to command $3.25 per square foot in early 2000.
At more than $400 per square foot, the sale of Colorado Center is “about at the top of the market” so far, said real estate broker Jerry Porter of Cresa Partners.
In April, entertainment mogul David Geffen sold a Beverly Hills office building for $412 per foot.
Two downtown L.A. high-rises recently changed hands for more than $240 per foot.
Chicago-based Equity Office is the nation’s largest real estate investment trust, with more than 124 million square feet of office space in major metropolitan markets. Its Southland holdings include SunAmerica Center in Century City, Two California Plaza in Los Angeles and the Tower in Westwood.
TIAA-CREF is the largest institutional real estate investor in the nation, with a global portfolio of $50 billion in real estate.
