To expedite the approval process of its new Century City condominium project, Related Cos. has worked out a settlement with homeowners groups that development experts say is unprecedented in Los Angeles.

Developers often work out monetary settlements with associations to address the concerns of local homeowners. And in exchange for fixed payouts, the groups agree not to oppose a development.

However, in the case of Related’s condo tower on the site of the former St. Regis Hotel, called The Century, a deal was done with seven nearby homeowner associations that could give them an equity interest should another high-end condo project now in the talking stages be developed.

As a result, the homeowners’ coalition presumably would get some percentage of any income created by that condo project.

Real estate industry professionals say that revenue generated by the nearby Century Woods Estates development which has yet to move beyond the conceptual stage would likely be quite a bit larger than a simple monetary settlement. It is unclear, however, how much money that would be.

“It is a gamble, but I would hope it would be in the many millions,” said Mike Eveloff, president of the Tract 7260 Association and a member of the coalition of homeowner associations that worked out the deal.

“It’s an unusual settlement that benefits the city, homeowners, and developer, and we are fortunate that as a result there has not been an appeal by any of the homeowner groups,” said Lisa Specht, partner at Manatt Phelps & Phillips LLP, who helped with land use and entitlement work on The Century for New York-based Related.

The deal involved the transfer of rights to generate traffic by a new development, which were limited by the 1981 Century City North Specific Plan. The document limits “daily arrivals at and daily departures from a building or structure by motor vehicles” but allows such “trips” to be traded among developers.

Given the amount of development in the area, all trips allowed under the plan already have been allocated. However, the demolition of the St. Regis Hotel left Related with excess trips, because its new Century condominium complex is expected to generate about 160 fewer daily trips than the hotel.

Meanwhile, because the site of the Century Woods project is a vacant lot fronting Century Park West and south of MGM Drive, any development there would need to acquire trips already allocated to another developer.

“They created a currency. Trips are traded back and forth because there are no new trips,” said Eveloff. “Within Century City, the game is how to maximize the value of trips and minimize the trips used.”

Bill Witte, president of Related of California, said that the company was in separate talks with the homeowners’ coalition and representatives from Century Woods when it was determined the excess trips could be used in a settlement.

Source familiar with the deal said they understood that the lot had been given to the 87-unit Century Woods Homeowners Association by JMB Realty Corp., as part of a previous settlement made between Century Woods and JMB. The Century Woods Homeowners Association declined to comment and JMB did not return telephone calls for comment.

According to the Los Angeles County Assessor’s Office, the parcel is owned by an entity called Century Woods Condominium.

“Basically it was a tripartite coming together of the coalition, Century Woods and us saying, ‘How can we kill several birds with one stone?'” Witte said.

Prior to the deal, the homeowners’ coalition had asked a group of developers with pending projects in Century City for a private settlement in the $50 million range but that settlement was rejected by the developers. Eveloff said any money the coalition would receive would go into a fund to improve local schools, police and fire department services, parks, libraries and transportation infrastructure.

However, it is not at all certain that any development will ever take place on the 60,000-square-foot Century Woods lot.

Sources with knowledge of the property say that the previous owner of the parcel, JMB, placed contractual restrictions on how it could be developed as part of the prior settlement made between JMB and the Century Woods Homeowners Association (the condominium association.)

Chicago-based JMB gave Century Woods the parcel as part of a deal to gain approval for the nearby MGM Tower, which opened in 2003. Sources said the idea was to have the condominium association perhaps build a pocket park there while Witte suggested that development of the lot could at best be “a small number of villas” that would be part of an extension of the adjacent Century Woods condominiums.

Bruce Spector, president of the Century Woods Homeowners Association, declined to comment, except to say, “There is no right to develop the property now. Whether or not it will ever be developed and whether any community will ever develop it is speculative.”

However, sources say that there are negotiations underway between Century Woods and JMB about the possible future development of the property.

Westwood Lease


Merrill Lynch & Co. Inc. has renewed its lease at the Center West office building in Westwood Village, signing a 10-year lease at the building it has occupied since 1997.

The deal for 26,174 square feet at the 23-story building is valued at $12 million, according to sources familiar with the Westwood real estate market.

A portion of the New York-based company’s investment banking division will continue to occupy the entire 19th floor and a portion of the 20th story. The building is located at Wilshire Boulevard and Glendon Avenue.

“They had a substantial investment in the infrastructure of their existing space,” said Peter Best, managing director of Jones Lang LaSalle Inc., who represented owner Center West LP on the transaction. “When you look at their space it looks like they just moved in. It’s beautiful.”

The deal breaks down to about $3.82 per square foot per month, a prime price for the space. “The market is substantially stronger than, say, three years ago, and there are no significant large blocks of space on the market,” Best said.

Mark McCaslin of The McCaslin Co. also represented Center West LP in the transaction. Joe Bellavia and Fawn Bellavia of Beitler Commercial Realty Services represented Merrill Lynch.

City of Industry Deal


Fortune Business Park, an industrial park in the City of Industry, has been sold for $21 million.

With the deal Chicago-based Lincoln Property Co. acquires a fully-leased industrial park with 13 tenants. MDC Industry LLC, a partnership of Master Development Corp. and GE Capital Real Estate, sold the property after purchasing it in August 2005 for $14.8 million.

Bryan Bentrott, executive vice president for MDC Industry, said that a tight industrial market in the area and the prospect for rent growth helped determine the sale price.

At about $133 per square-foot, the deal was done at market rate, Bentrott said. “It was a nice return for us and all of our investors,” he said.

Michael Ross, Thomas Taylor, Steven Belletti and Fred Cordova of Colliers Seeley International Inc. represented both sides of the deal.