Tishman Sells Oft-Traded Tower Burbank for $167 Million

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A partnership led by Tishman Speyer Properties Inc. has struck a deal to sell its 32-story Tower Burbank for $167 million.


Pension fund advisor Blackrock Inc. is buying the 473,000-square-foot tower for $356 a foot. The building is fully occupied with 95 percent leased to Walt Disney Co., which is locked in below-market rents until 2008.


When the lease expires, Disney is expected to exercise a five-year renewal clause. In recent years, the company has been expanding its operations in the building, located at 3900 W. Alameda Ave.


The Tishman Speyer partnership bought the building two years ago for $120 million, or nearly $254 a foot, from Beacon Capital Partners. The sale marks the third time the tower has traded hands in the last four years.


Built in 1989 just off the Ventura (134) freeway, Tower Burbank is on the edge of the Burbank Media District, which is home to a number of movie and television studios.


Meanwhile, with the sale of Tower Burbank, Tishman Speyer continues to adjust its Los Angeles portfolio. Earlier this month the New York-based company agreed to buy the 287,000-square-foot Maple Plaza in Beverly Hills for $106 million.


During the last year, Tishman Speyer paid $40 million for the 125,000-square-foot Beverly Mercedes Place in Beverly Hills, and the company shelled out $75 million for 6300 Wilshire Blvd. In 2003, Tishman Speyer sold its 1.1 million-square-foot Santa Monica office park, Colorado Center, to a partnership of Equity Office Properties Trust and TIAA-CREFF for $443.6 million.


Secured Capital Corp. had the Tower Burbank listing and represented both sides of the deal.



Viking Deal


Legacy Partners has closed a deal to buy the former Viking Office Products Inc. building in Torrance.


The property, vacated after Office Depot Inc. bought the company, sold for about $24 million, or $130 a foot, according to sources.


Scott Word, a senior vice president at Legacy Partners, confirmed the transaction but declined to provide a sales price.


The 186,000-square-foot building sits on 9.25 acres at 950 W. 190th St. and was sold off as excess corporate real estate after the merger was finalized.


Word said that the deal makes sense, even though the South Bay has one of the weakest office markets in Los Angeles County. Legacy bought the building with all its fixtures, furniture and equipment intact, which could reduce tenant improvement costs if the company can find the right user.


“It’s complementary to our existing Southern California portfolio and we bought it at a fraction of its replacement cost,” said Word, who believes that as neighboring office markets begin to fill up large office tenants will be drawn to the South Bay.


“Look at the whole region and if you’re looking for 150,000 square feet or more you have a limited number of options,” he said. “The South Bay market may be soft but this building represents one of the highest-quality options out there.”


Meanwhile, in nearby Marina del Rey, ARINC Inc., a provider of communication systems and services for the aviation industry, inked a lease for 18,995 square feet at Marina Business Center II.


The transaction is valued at more than $2.5 million over the 5-year term of the lease, according to PM Realty Group’s Chris Strickfaden, who along with colleague Jim Bowers represented ARINC. The building’s owner, TIAA Realty Inc., was represented by Trammell Crow Co.’s Craig Meyer.



New Patients


The Los Angeles Unified School District has paid about $8.7 million to take the former Elstar Community Hospital in East Los Angeles out of bankruptcy.


The site will become a school of some kind but the district hasn’t yet determined what the neighborhood’s greatest need is, said Shannon Johnson-Haber, LAUSD facilities spokeswoman.


Elstar filed for Chapter 11 bankruptcy protection two years ago but a judge pushed the 200-bed acute facility at 319 N. Humphreys Ave. into liquidation after ruling its debts were too great to be restructured.


Founded in 1924, Elstar was run by the Carondelet Sisters, a religious order, for 78 years. Faced with a bleak economic outlook, the order sold the hospital to a private health care company but the losses continued to mount.


At the time of the liquidation proceedings, Brad Krasnoff, the court-appointed trustee, told the Los Angeles Times the hospital had $10 million in debts and couldn’t pay its roughly 400 workers.



One Wilshire


One Wilshire, a telecom and office building located in downtown Los Angeles, has been put on the market by the Carlyle Group, the Washington, D.C.-based private equity behemoth.


The 650,000-square-foot building, located at 624 S. Grand Ave. at the terminus of Wilshire Boulevard, hence the name is expected to fetch more than $300 million, according to Bob Safai, the Madison Partners principal with the listing.


Nearly 60 percent of the building houses telecom switching stations for companies that include MCI Inc. and Nextel Communications Inc. The other 40 percent is mostly occupied by law firms.


A quarter of the building is tied up in leases with seven to 10 years remaining, Safai said. Last May, Carlyle renewed law firm Musick Peeler & Garrett LLP to a 14-year lease for 106,475 square feet worth $36 million.


The building has a net operating income the amount of cash the building throws off annually of $21.5 million.


Since the dot-bomb, other telecom buildings downtown have been sold for far below market value and are being converted back into office space. But One Wilshire has blue-chip tenants and the building stands to gain from fewer telecom buildings in the market, Safai said.


All bids for the building will be due by the end of June, Safai said.



*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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