Landlord Equity Office Properties made waves in 2007 in the commercial real estate community when it priced its Westside office buildings at the very top of the market. Asking rents were about $6.75 per square foot per month.
But with the collapse of the office leasing market, EOP, a unit of New York private equity group Blackstone Group LP, was forced to lower rates. In March, the Business Journal reported that a lease at an EOP building had a start rate of a little less than $4 per square foot per month on a full-service gross basis.
Now, with the signing of a 50,000-square-foot lease at the company’s 24-story 10960 Wilshire Blvd. building, brokers believe a bottom has been established for Class A office space on the Westside.
The October lease with accounting firm Nigro Karlin Segal & Feldstein LLP, valued at more than $22 million, starts in the low $3 range per square foot per month before escalating.
“They have clearly become the leader in dropping rents to find the correct market,” said Blake Mirkin of CB Richard Ellis Group Inc., who represented the tenant. “Depending on the amount of vacancy in a building I think landlords have (to be) aggressive.”
The 595,600-square-foot building in the heart of the Westwood submarket is now 91 percent leased, according to Hunt Barnett of Madison Partners, who represented EOP. “EOP and Blackstone have been nimble and quickly reacting to the changing market now being more of a tenant market.”
The accounting firm is moving from 10100 Santa Monica Blvd. in Century City because of EOP’s attractive offer, Mirkin said. EOP included a large tenant improvement allowance in the lease, which will begin in December 2010.
Madison Partners’ Karly Nolen, Beau Rawi, Chris Houge and Peter Best also represented the landlord.
EOP declined to comment.
Debt Deal
A partnership of two New York real estate investment companies has purchased a portion of the debt held on 6300 Wilshire Blvd., a 388,000-square-foot office building owned by Legacy Partners Inc. of Foster City.
Lane Capital Partners and FBE Ltd. bought the $15 million note from an unnamed insurance company in late October. The partnership purchased what is known as a “B-note,” subordinated senior debt that puts it second in line in the capital stack behind one other senior debt holder.
The partnership’s debt is collateralized by the 21-story office building. The note was created in 2006 when Wachovia put together a debt package of about $105 million to finance Legacy’s $133 million purchase of the building that year from Tishman Speyer Properties LP.
Alan Leavitt, managing member of Lane Capital, said Legacy is current on its payments, but his firm expects to make its profit when the debt matures in 22 months. (At that point, Legacy would either refinance the loan, sell the building or give the keys back.)
“We believe that the B-note will provide an attractive yield. Built into the pricing is there is some risk that the borrower will not get enough refinancing proceeds to pay you off,” he said. “I am comfortable that at the dollar exposure I am in for, that there would always be someone willing to buy the building if I had to sell it.”
The property is about 80 percent leased and magazine publisher Condé Nast is a key tenant, according to Leavitt.
Legacy, which lists its local office at the building, was unavailable for comment.
Rat Pack Sale
A Robertson Boulevard retail property owned by the estate of Rat Pack member Joey Bishop has been sold for about $900 per square foot.
The $6.2 million sale of the 6,876-square-foot multitenant property at 359-373 Robertson Blvd. to Sakhi Properties LLC closed Nov. 2.The buyer owns and operates Amadi Carpets Inc., a high-end carpet manufacturer and wholesaler across the street at 408 Robertson. It plans to open a showroom in its new space during the first quarter of next year.
“It will be a second gallery and I will be using it to accommodate inventory,” said Zubair Ahmadi, co-owner of the carpet business.
Broker Jay Martinez of Lee & Associates Commercial Real Estate Services, who represented both parties, said some tenants at 359-373 Robertson are on month-to-month leases and will leave to make room for Amadi.
Martinez said that the property had been listed in April for $8 million, though he’d recommended a listing price of $6.5 million. Nevertheless, there were 23 offers for the property, with Sakhi making the highest bid.
“It’s just a world-class location and it goes to show people still pay a premium (for that),” he said.
A representative of the selling entity, Joey Bishop Productions Inc., declined to comment. Bishop, who starred in the original “Ocean’s Eleven” and “Valley of the Dolls,” among other films, died in 2007.
The buyer was also represented by Mike Tingus of Lee & Associates.
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
