A 40-story property in downtown known as Union Bank Plaza has sold for $80 million. It includes a 674,731-square-foot office tower and 27,157 square feet of street-level retail and is located at 445 S. Figueroa St.
While the purchase price may seem hefty, downtown-based Southwest Carpenters Pension Trust bought the building for significantly less than it sold for just last year.
Newmark Group Inc. Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairs Ken White, Rob Hannan, Laura Stumm and Michael Moll, Executive Managing Director Bill Bloodgood, Senior Managing Director Chris Benton and Managing Director Anthony Muhlstein, as well as Co-President of Global Debt & Structured Finance Jonathan Firestone represented the seller, W/B Union Plaza Holdings, in the transaction. Newmark also represented Washington Capital Management, which acted on behalf of the buyer.
W/B Union Plaza Holdings is an affiliate of Waterbridge Capital. The company had purchased the building in March 2023 for $111 million. After that acquisition, Union Bank paid a large lease termination payout amid the company’s merger with U.S. Bank and subsequent relocation to the U.S. Bank Tower.
Southwest Carpenters Pension Trust will occupy part of the building and lease the rest as part of the latest sale of the property, according to Newmark.
“This was a win-win transaction for the buyer and seller,” Shannon said in a statement. “The buyer acquired an institutionally renovated office tower at approximately $100 per square foot, factoring in the value of the substantial adjacent development parcel that provides future upside potential. The buyer will also occupy a significant portion of the building, effectively fixing their long-term operating costs. This is a massive discount to replacement cost and peak pricing of approximately $500 per square foot. The seller also received a substantial return, given the greatly reduced cost basis due to the Union Bank lease buyout.”
Downtown’s office market has largely seen high vacancy rates and negative net absorption since the pandemic. During the third quarter the market’s vacancy rate was 30.3%, up from 15.8% in the third quarter of 2019, according to data from Jones Lang LaSalle Inc. And so far this year the market has seen negative absorption of roughly 781,000 square feet, the brokerage found.
And a number of buildings have sold at a discount. Earlier this year the county agreed to acquire the Gas Company Tower. The Board of Supervisors recently voted to let the deal move forward but said it could not exceed $200 million.
The property was slated for a foreclosure auction after Brookfield failed to pay a $465 million loan package for the property. Brookfield also defaulted on $319 million worth of loans nearby at 777 S. Figueroa St.
A number of other buildings have also defaulted in the last few years.
