Historic studio site sold
The original Warner Bros. studio in Hollywood, now home to KTLA-TV Channel 5 and other Tribune Co. entertainment companies, was sold for $125 million Wednesday to a Los Angeles real estate investment firm.
Hudson Capital, which owns Sunset Gower Studios a few blocks away, completed the expected purchase from Tribune, Hudson managing partner Victor Coleman said. Chicago-based Tribune owns KTLA, the Los Angeles Times and other media outlets.
It was the first major sale of Tribune property since Chicago real estate mogul Sam Zell took over the company last month.
Tribune said it would use the money from Wednesday’s sale, plus an additional $50 million from other sales, to buy six other properties, including the downtown Los Angeles headquarters of The Times, for a total of $175 million.
The properties are now owned by a trust held by members of the Chandler family, which once owned The Times. They also include buildings that are home to the Baltimore Sun, the Hartford Courant and Newsday. The properties have been leased to Tribune since it bought Times Mirror Co. in 2000.
The sale of the studio is a money saver for Tribune, said David Contis, who works for Zell and advises Tribune on real estate matters.
“This will cut occupancy costs in those buildings 50%, exchanging rent for mortgage payments. This is a great deal for the company,” he said.
The deal was a like-kind property exchange, which defers federal capital gains taxes, Contis said.
KTLA has a five-year lease to remain in its Hollywood home and Tribune will negotiate with the new property owner for the station to stay much longer if Hudson will help upgrade its studios, Contis said. “They need some new facilities.”
Tribune has no plans now to sell other assets, he added, Real estate industry observers, however, expect the company to continue looking for ways to profit from its holdings.
Tribune announced in August that the studio, at the southeast corner of Sunset Boulevard and Bronson Avenue, was for sale. The block-size lot also houses Tribune Entertainment and Tribune Studios.
The property includes the prominent Colonial-style mansion facing Sunset that was built by Warner Bros. in 1919 and once housed a popular bowling alley. Current television shows shot at production facilities on the property include “Judge Judy” and “Judge Joe Brown.” “Hannah Montana” is on hiatus.
Hudson Capital bought Sunset Gower Studios, the former Columbia Pictures headquarters, for $200 million in August.
The firm is headed by investors Howard Stern and Coleman, former president of Los Angeles office landlord Arden Realty Inc. Sunset Gower Studios was Hudson’s first major acquisition.
“We really like the opportunity to buy good-quality real estate with an operating business backing it,” Coleman said. “There is a lot of capital going into the entertainment business.”
Tribune Studios will be renamed Sunset Studios, he said. Wednesday’s sale included three other parcels in the neighborhood used mostly as parking lots, which Hudson plans to develop. Coleman declined to say what form development might take.
Hudson also plans to make millions of dollars’ worth of upgrades to the studio.
The news prompted City Council President Eric Garcetti, who represents Hollywood, to press for more entertainment-related uses by Hudson.
“If they can put more moviemaking and office space there, it would do something great for L.A.,” Garcetti said. “We have companies knocking doors down to find production and postproduction facilities” in the neighborhood.
The large purchase price reflects how studios remain “precious assets” even in a troubled real estate market, said real estate broker Carl Muhlstein of Cushman & Wakefield, who represented Tribune in the sale.
“Where else can you get land parcels of this size” in highly developed areas, he said.
The interest in studios that have space for expansion also reflects changes in the industry, Muhlstein said.
“The business has gotten more complicated with all the marketing, branding and postproduction. They need a lot more space.”