IDS Equities LLC has agreed to pay City Centre Development Ltd. about $50 million for a 6.3-acre parcel north of Staples Center, according to sources close to the deal.

IDS would continue with plans hatched by City Centre more than a decade ago to build a massive condominium, retail and hotel project at the downtown L.A. site that could cost more than $750 million, sources said.

The project would be one of the largest residential mixed-use projects in Los Angeles.

Martha Jordan, a partner at Latham & Watkins LLP representing City Centre, confirmed a deal is in the works but, citing confidentiality agreements, wouldn’t disclose terms.

While IDS has the site under contract, the deal could still fall apart if the firm can’t raise financing or gain approval from the city’s Community Redevelopment Agency, sources said.

Jordan said if a deal can be reached, it will likely be completed this fall. If the deal cannot be completed, City Centre wants to start construction by year’s end or early 2006, Jordan said.

City Centre began assembling the site bordered by Eighth and Ninth streets between Francisco Street and the Harbor (110) Freeway in the mid-1980s. In 1993 the company received entitlements for a 2.6 million-square-foot office, hotel and retail project it called Metropolis. (In October, the company asked the city to allow it to build condos instead of offices.)

However, the original approvals coincided with a recession and a steep decline in demand for office space in downtown Los Angeles, as most of the city’s corporate headquarters were gobbled up or were disappearing.

With the Los Angeles economy in turmoil, City Centre couldn’t get the project off the ground and the site has been used as overflow parking for Staples Center events.

If a sale is finalized, IDS plans to ask the city to allow it to build the same project envisioned by City Centre except with condominiums instead of office space.

Pricey Rooms


Hilton Hotels Corp. has put the 351-room Hilton Glendale on the market as part of a national 10-property portfolio.

The $1 billion portfolio contains hotels in eight states with a cumulative 3,289 rooms. None of the others are in California. Within the portfolio, brokers said the 13-year-old hotel at 100 W. Glenoaks Blvd. could fetch $80 million or more.

“I could definitely see it going that high,” said Alan Reay, president of Costa Mesa-based hotel brokerage Atlas Hospitality Group. He added that the Tri-Cities submarket of Glendale, Burbank and Pasadena is “very, very strong.”

The Hilton Glendale has two restaurants, a fitness center/spa, four executive levels and a rooftop bar. In 2001, Hilton spent $2 million renovating the hotel to create a conference center with five rooms that contain 6,500 square feet.

The hotel was built in 1992 by Promus Hotel Corp. as a Red Lion Inn. It was converted to a Hilton after Beverly Hills-based Hilton bought Promus in 1999.

The hotel annually sheds about $5 million in net operating income, which is the amount of money made on rooms and services after expenses. The figure is a key indicator of a hotel’s success.

Reay believes that because of the low ratio of income to price, the hotel and the portfolio as a whole will be picked up by a real estate investment trust, a class of publicly traded real estate firms.

“At that price it’s really limited to REITS,” he said, “because their cost of borrowing is so much cheaper than anyone else’s.”

Out of Glendale


Reading International Inc. has agreed to sell a Glendale office building for $21 million, according to Securities and Exchange Commission filings.

The L.A.-based developer of movie theaters said it agreed to sell its 96,000-square-foot office building and 128,537-square-foot parking garage at 601 Brand Blvd. for $21 million, to an unidentified buyer.

The building, Reading’s last remaining California real estate holding, is 100 percent leased to Walt Disney Co. and Cal National Bank.

Six years ago, Disney leased the building but the company never occupied any of the space.

“They thought they might need the space because at the time the expansion of Disney was happening so fast that the real estate procurement got ahead of the actual requirements,” said Bill Boyd, a Grubb & Ellis Co. senior vice president who worked on leasing the building. “When they found they didn’t have a use for the space, they began subleasing without ever conducting any interior improvements of their own.”

Disney was able to find tenants to take 100 percent of the space. Those subleases now have about four years remaining before tenants wishing to stay must renegotiate with the new owner.

Reading said in the SEC filings that proceeds from the sale will be used to buy the building, ground lease and fee interest for movie theaters it currently leases on Third Avenue in New York City, Cinemas 1, 2 & 3. (Reading also runs Angelika Film Centers in Manhattan and elsewhere, along with several Broadway and off-Broadway theaters.)

Calls to Reading officials were not returned.

South Bay Sale


After owning the El Segundo Research Center for about 18 months, Red Sea Group has netted $5.5 million selling the two-building complex to Alliance Commercial Properties.

Alliance paid $28.5 million for the business park, which consists of a 126,000-square-foot building at 501 Continental Blvd. and an 80,000-square-foot building at 1940 Mariposa Ave.

Alliance, a real estate investor that seeks out underutilized buildings it can lease up, is buying the complex for the larger building, which has been vacant more than two years.

The company already has struck a deal to sell the smaller, fully leased building to Legacy Partners for $15.4 million. Wireless circuitry designer TelASIC Communications Inc. and enterprise software designer Glovia International Inc. have long-term leases that take up the entire building. The transaction with Legacy is expected to close April 25.

“The value-added part of this deal is in the vacant building,” said Bob Safai, a Madison Partners principal who represented all sides in the transaction, “so I found a buyer for the leased-up building.”

Red Sea paid $22 million for the complex in 2003, and completed a $1 million renovation of the larger building, which could make it easier for Alliance to sign tenants, Safai said.

*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at

[email protected]

.