Update: Aon Center Sold for $192 Million

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Broadway Real Estate Partners LLC has agreed to pay Transwestern Investment Co. $192 million for the Aon Center, downtown L.A.’s second-tallest high-rise, according to sources close to the deal.


The deal comes just weeks after MetLife Inc.’s investment committee turned down plans by the New York-based insurance giant to purchase the building at 707 Wilshire Blvd.


Broadway Real Estate Partners is paying slightly less than the $196 million that sources said MetLife originally planned to spend. The new sales price equates to $160 a foot for the 1.2 million-square-foot tower. The deal also includes a 1,000-space parking garage.


Calls to Transwestern and its brokerage, Eastdil, were not returned. Charles Millard, managing director of Broadway Real Estate Partners, declined comment.


The short time it took for Transwestern to line up a new buyer underscores the intense competition among institutional real estate investors for trophy office buildings throughout Los Angeles, especially in the downtown and Westside submarkets.


Buyers of office buildings are paying ever-higher prices in a bet that downtown’s office market will continue to strengthen. According to preliminary second quarter data from Grubb & Ellis Co., average office vacancy in downtown L.A. dropped nearly two percentage points to 15.9 percent, while asking rents for premier buildings held steady at $2.61 a foot.


With the purchase of Aon Center, Broadway Real Estate Partners has thrown its West Coast expansion plans into high gear.


In the past year, the private equity firm has purchased two prime Beverly Hills addresses the Wilshire Rodeo Plaza at 9536-9560 Wilshire Blvd. and the 12-story office building at 9701 Wilshire Blvd. The Aon Center deal would be its largest L.A. property by far.


The 62-story tower, L.A.’s tallest when it was built in 1973, is about 25 percent vacant.


Known as the UCB building until 1981, when United California Bank changed its name to First Interstate Bank, it was the site in 1988 of a fire that killed one man and charred five floors.


The building was renamed 707 Wilshire Tower in 1996 when First Interstate merged with Wells Fargo, and became Aon Center two years ago when the insurance company more than doubled its occupancy in the building to 205,000 square feet.


Wells Fargo paid $47.5 million for the 50 percent share of the Aon Center owned by its partner, Equitable Life Assurance Society of the United States, in 2001. Transwestern bought the building in late 2003 from Wells Fargo & Co. for $120 million.


Earlier this year, Transwestern hired Eastdil to refinance the building, but the company changed its mind once brokers brought back high-priced bids to buy the property.


Aon Center’s vacancy levels and asking rates have lagged other downtown buildings, according to tenant brokers. In addition, the 200,000 square feet occupied by Chicago-based Aon is up for renewal in the next couple of years.


Trade publication Real Estate Alert first reported the deal with Broadway Real Estate Partners.

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