Kennedy-Wilson Inc. generated a lot of news last week, with the acquisition of yet another property management firm and the decision to sell a $100 million portfolio of Los Angeles office properties.
Kennedy-Wilson acquired Jones Lang Wootton California Inc., a regional property management firm with 7 million square feet of office and industrial properties under management.
The acquisition Kennedy-Wilson’s second this year expands the company’s national property management portfolio to 60 million square feet. The goal is to expand that portfolio to 100 million square feet by 2000.
Meanwhile, Kennedy-Wilson is actively seeking buyers for a large L.A. office portfolio, which Bob Safai of Madison Partners is helping bring to market. The portfolio consists of four properties encompassing 700,000 square feet at 6255 Sunset Blvd. and 7080 Hollywood Blvd. in Hollywood, 6380 Wilshire Blvd. in the Miracle Mile area, and 5900 Sepulveda Blvd. in Van Nuys.
Safai thinks it’s a good time to sell the properties because the market has improved enough to bring Kennedy-Wilson a profit, but there is still plenty of room for property values to keep rising making them an attractive investment for buyers.
“It’s time to go to the market and leave enough on the bone for the next person,” said Safai, who is working with Mary Ricks and Brian Lezak of Kennedy-Wilson.
The company acquired the properties last year and embarked on a program of renovations and intensive leasing, with the assistance of Madison Partners. Safai said the buildings have gone from average occupancy of 60 percent to 88 percent today. In all, 200,000 square feet of leases have been signed in the buildings, which could be purchased as a portfolio or single assets.
“It’s all in conjunction with our business plans and profile as short-term, value-added players,” said Nick Kanieff, president of Kennedy-Wilson’s commercial real estate investment group. The company typically looks for emerging markets, then renovates and leases up the properties before selling them and moving on. In this case, the Miracle Mile and Hollywood submarkets have been so hot that Kennedy-Wilson accelerated its plans to sell by about six months, Kanieff said.
Safai said the two Hollywood properties represent 35 percent of the class-A market there.
“This is the best time to buy in the Hollywood market. It still has upside in rents,” Safai said. “It’s the low-cost alternative for the Westside and Tri-Cities.”
Kennedy-Wilson plans to re-deploy the proceeds in Japan, where it has been aggressively investing in property.
“Kennedy-Wilson is gearing up operations in Japan,” Kanieff said. “It’s difficult to find value-added opportunities in California.”
Not the full Monty anymore
It can no longer be called the Monty’s Building. The steakhouse tried to stick it out during renovation work, but instead has moved out of its longtime home at 1100 Glendon Ave. in Westwood.
And it won’t be coming back, said a spokeswoman for landlord Arden Realty Inc. No details were provided on the settlement between the parties, but Arden officials say the penthouse space will no longer house a restaurant. Instead, Arden is looking for a ground-floor restaurant.
Burbank office building sold
NLP Holding Co. of Texas bought the one-story building at 1935 Buena Vista St. in Burbank for $21 million.
The 136,500-square-foot building is occupied by Warner Bros.’ animation division, which still has about 10 years to go on its lease, said Safai, who sold the property on behalf of Lowe Enterprises.
Lowe renovated the building, which was constructed in 1973, into creative office space, with exposed brick walls.
North Hollywood lease
Speaking of animation in the Valley, Sony Pictures Entertainment leased 27,000 square feet in the Academy Building in North Hollywood for two animated television shows.
“It solidifies the Valley as the hub of animation,” said Scott Murphy of Prentiss Properties Ltd., which owns the building at 5200 Lankershim Blvd. The four-year lease is valued at just under $3 million.
The Academy of Television Arts and Sciences is another tenant in the building, as is Walt Disney Co., which just renewed its 27,000-square-foot lease for five more years, Murphy said.
Sony, which is consolidating from Culver City and a studio lot, was represented by Carl Muhlstein and Michael Buland of Cushman Realty Corp.
Tenants shuffle for county
L.A. County signed a 10-year lease for close to $14 million in the Culver City area.
The county took 53,000 square feet of space at Water Ridge, which is a four-building office project that Legacy Partners bought about 18 months ago.
The lease involved moving several other tenants within the project in order to create the last contiguous piece of space in the Culver City-Fox Hills area, said broker Steve Solomon of the Seeley Co., who represented Legacy.
Solomon said that since Legacy acquired the project, occupancy has risen from 60 percent to 98 percent. He said the low vacancy factor in that market about 7 percent is a direct result of the tightening and rising rents on the Westside.
News & notes
Downtown L.A. received some good news last week, as the City of Hope leased 50,000 square feet at 1055 Wilshire Blvd. for its development office. The cancer research organization is moving from Eighth and Spring streets downtown to just west of the freeway, where its name will grace the top of the building. Nick Kanieff represented Kennedy-Wilson, which owns the building. City of Hope was represented by Bruce Rutherford and Terri Witteman of Jones Lang LaSalle
Last week, groundbreaking was held for a $35 million office project in El Monte that is 100 percent leased to L.A. County’s Department of Public Social Services. Sonnenblick-Del Rio Development Inc. of Brentwood is developing the project, which is at 3350 Aerojet Blvd.
Elizabeth Hayes can be reached at (323) 549-5225 ext. 229.
