Wilshire Courtyard is changing hands as part of a portfolio transaction that values the mid-Wilshire office complex at $378 million, according to sources close to the deal.
Stockbridge Capital Partners is selling its roughly 95 percent stake in the distinctive granite complex on Wilshire Boulevard, along with the 738,000-square-foot Metro Center at South Coast in Costa Mesa, to German fund manager RREEF Funds LLC for a total of $630 million.
Stockbridge’s stake in Wilshire Courtyard, whose two buildings total 1 million square feet, is valued at $360 million, sources said. At that price, the deal values the Wilshire Courtyard $378 a foot.
Wilshire Courtyard is home to a number of media industry tenants including Variety, the Business Journal and E! Entertainment Television. (The Business Journal received notice of the pending sale but the buyer wasn’t identified.)
The price is far higher than the $228 a foot Arden Realty Inc. paid earlier this year for the 27-story tower across the street at 5670 Wilshire Blvd.
The deal with RREEF is expected to close in several weeks. McCarthy Cook & Co., the minority owner of both buildings, will retain its interest and continue managing the offices, sources said.
Calls to RREEF weren’t returned.
Stockbridge’s broker on the deal, Secured Capital Corp., declined to comment. Thomas E. McCarthy, co-president of McCarthy & Cook, also declined to comment.
Wilshire Courtyard tenants such as developer Kor Group Inc., Entravision Communications, poker promoter WPT Enterprises and AEG Concerts all have long-term leases in the buildings at 5700-5750 Wilshire Blvd. Asking rents are close to $3 a foot.
After Stockbridge hired Secured Capital several months ago, there have been rumors over whether Wilshire Courtyard would be sold or simply refinanced.
In the end, Secured Capital took the building to RREEF on behest of Stockbridge, which has a relationship with the German fund manager. Stockbridge previously sold RREEF its stake in the Pinnacle office building in Burbank for $135 million.
Stockbridge, based in San Mateo, recently struck a deal with Churchill Downs Inc. to buy the 238-acre Hollywood Park in Inglewood for about $265 million. That deal is expected to close in September.
Arden Disposition
As part of an ongoing reshuffling of its portfolio, Arden Realty Inc. has sold its office complex at 100 W. Broadway in Long Beach to Adler Realty Investments Inc. for about $31 million.
The building is at the intersection of Broadway and Pine Avenue, the epicenter of Long Beach’s retail and commercial core. It also is near the city’s residential redevelopment projects.
Built in the late 1980s, the complex consists of two six-story buildings comprising 195,000 square feet and a shared parking structure. Arden Realty and its brokerage on the deal, Secured Capital, declined to comment.
After a large engineering firm relocated, the complex is 30 percent vacant nearly double the average in downtown Long Beach at the end of June, according to Grubb & Ellis Co. Asking rents in downtown Long Beach averaged $2.15 a foot.
The buildings are occupied by mostly small tenants and the complex is known more for being the location of King’s Fish House.
Adler also paid $25 million for a 248,000-square-foot Bakersfield office building that Arden has had on the market. The buildings are part of a six-property portfolio Arden announced it is marketing. Palmer Group brokered the Bakersfield deal.
Arden officials on a conference call said they’re selling two Long Beach buildings, two Bakersfield buildings and one building each in Orange County and Los Angeles.
Last week Arden also announced the sale of Parkway Center 1 in Bakersfield and a 55,000-square-foot building at 145 S. Fairfax Ave. in Los Angeles.
Arden has been refocusing its portfolio for more than a year. The strategy has been to exit markets it sees as less desirable so the company can focus its resources elsewhere in Southern California. The company has already exited submarkets in Temecula and the Inland Empire.
“Our strategy has been to look at our portfolio and determine which markets are secondary for us,” said Amy Ko, first vice president of finance at Arden. “We want to focus on our core markets in Southern California and continue to invest in those areas.”
Lucrative Learning
University of Phoenix has renewed and extended its presence in Pasadena.
The company, which offers online courses as well as class instruction, inked a seven-year deal for 45,000 square feet at 299 N. Euclid Ave. The lease is worth about $8 million for the building’s owner, Arden Realty.
The lease marks a continued office-market tightening in Pasadena, where the 5.6 percent office vacancy level at the end of June was the third-lowest in Los Angeles County, according to Grubb & Ellis. (The only tighter markets are Santa Clarita’s 3.4 percent and the Central Valley’s 5.1 percent.) Asking rents in Pasadena have averaged $2.53 a foot in the second quarter.
University of Phoenix considered other options, including a free-standing building and a build-to-suit, according to Robert Chavez, president of Guardian Commercial Realty, who represented the tenant.
“Arden really stepped up,” Chavez said, “and resolved a number of issues the tenant had, including more parking.”
Arden officials declined to comment on the deal.
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
[email protected]
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