Developer Wayne Ratkovich’s firm is under contract to buy the 32-story People’s Bank building in the Miracle Mile.
Ratkovich has agreed to pay close to $105 million for the 500,000-square-foot high-rise at 5900 Wilshire Blvd., according to sources close to the transaction. At that price, Ratkovich would pay $210 a square foot for the building, across from the Los Angeles County Museum of Art.
Though the Miracle Mile office market has picked up steam in the last few quarters, the per-square-foot-price is below other recent Miracle Mile transactions.
Earlier this year, Arden Realty Inc. paid $228 a foot for the 27-story tower at 5670 Wilshire Blvd., and Rreef Funds LLC paid $378 in August for a 95 percent stake in the 1 million-square-foot Wilshire Courtyard at 5700-5750 Wilshire Blvd.
The People’s Bank building is about 25 percent unoccupied a higher vacancy rate than the Miracle Mile/Park Mile submarket’s average of 10.7 percent for the third quarter, according to Grubb & Ellis Co. People’s Bank is no longer in the building, and the largest tenant may be the L.A. Fitness on the ground floor.
Sid Moray, general partner with the building’s owner, R.M.R. Properties, confirmed a deal with Ratkovich but wouldn’t comment on terms. Ratkovich declined comment. The tower, the only office building in R.M.R. Properties’ portfolio, hadn’t been on the market, Moray said.
The sale is expected to close by mid-December. Ratkovich’s multi-million dollar deposit on the building is non-refundable, so while the deal could still unravel, sources said that was unlikely.
R.M.R Properties, primarily a shopping center owner, bought 5900 Wilshire Blvd. nine years ago for less than $20 million. Moray said the firm will use profits from the sale to buy more shopping centers in Los Angeles, Ventura and Santa Barbara counties. “It was a good investment,” said Moray.
Ratkovich Co. is known for urban infill and rehabilitation projects, especially restoring and breathing new life into historic office buildings. Among his notable projects: the Oviatt Building and the Fine Arts Building in downtown L.A., and the Pellissier Building with its Wiltern Theatre, at the corner of Wilshire Boulevard and Western Avenue.
With his recent purchases, Ratkovich has moved away from older buildings. He paid $30 million for a modern 16-story office building last year at 800 Wilshire Blvd. in downtown L.A.
Fine Tuning
Guitar Center Inc. is expanding its Westlake Village headquarters.
The company is paying $12.2 million to buy a 96,000-square-foot industrial building at 5775 Lindero Canyon Road. The extra space will be used for offices and a warehouse.
Buying the building allows Guitar Center to plan for future growth, while remaining in its current location at 5795 Lindero Canyon, where it rents 69,000 square feet.
“We started with the need to expand their headquarters space to accommodate existing head count and future corporate growth,” said Staubach Co.’s Gary Horwitz, who represented Guitar Center on the deal. “We went through extensive scenario modeling with them for months.”
Guitar Center, whose lease runs into 2009, considered expanding in its current building, taking more space in a different building and buying or leasing a build-to-suit project. But in the end, company executives didn’t want to leave Westlake Village. “They are very much ingrained in that community,” Horowitz said.
Instead, John and Denise M. Goodsen unexpectedly put the building next door on the market and Guitar Center made an aggressive bid for the building. “It allows them to stay in existing leased facility and expand across the parking lot,” Horowitz said. “It created a whole new set of possibilities.”
The sellers were represented by Jeffery Hitz of Westlake Village-based Level One Commercial Real Estate.
In addition to Horwitz, Guitar Center was represented by Staubach Co.’s Tony Morales and Alan Aufhammer, and also by CB Richard Ellis Group Inc.’s Michael Slater. (Aufhammer and Horowitz recently left CB Richard Ellis for Staubach).
Watergate Digs
BentleyForbes LLC has purchased the Watergate office building in Washington, D.C. from Trizec Properties Inc. for $86.5 million.
The building is where GOP operatives broke into the Democratic National Committee headquarters in 1972, sparking the scandal that led to the resignation of President Richard M. Nixon.
BentleyForbes, a privately held Los Angeles real estate investment firm, plans minor renovations to the 11-story building, which also has 61,000 square feet of retail space at 2600 Virginia Ave. N.W. The adjacent hotel is not part of the deal.
David W. Cobb, president and chief executive of BentleyForbes, said the company had been scouring the Washington market for some time, but that fierce competition and high prices had kept them at bay.
“The market is very strong, probably the strongest in the country,” Cobb said. “There wasn’t anything particular about this building. We’ve been looking to acquire a nice building in that market.”
While Washington’s market vacancy rates are hovering above 4 percent, Cobb said there’s room for improvement at the Watergate. “Rents are below market in this building, we believe,” he said. “We are going to do some minor upgrades.”
He also said the company, controlled by C. Frederick Wehba, is staying private, despite recent speculation that it would go public. “We might be in the market to do joint ventures in the future,” Cobb said. “We would probably go the JV route rather than the ‘going public’ route.”
The Watergate purchase illustrates the new direction that Cobb has been taking with BentleyForbes. The firm has been shedding its portfolio of single-tenant buildings in favor of multi-tenant properties like the Watergate.
“It’s all part of our capital recycling program,” he said. “We see better risk-adjusted returns from multi-tenant (properties) as compared to single.” The Watergate sale was first reported in the Washington Post.
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
[email protected].
