By ELIZABETH HAYES
The long-anticipated sell-off of Japanese-owned real estate in Los Angeles has begun in earnest, with the Century Plaza Hotel and much of Shuwa Corp.'s big L.A. portfolio up for sale, and a leasehold on the ABC Entertainment Center already in escrow, according to real estate sources.
The sell-off stems from the Asian financial crisis and the need for cash by Asian investors. Other factors include more attractive investment opportunities in Asia and a strong U.S. dollar, which makes the sale of U.S. assets more attractive.
Still another catalyst is a recent upswing in L.A. property values, which has erased at least some of the paper losses the Asians suffered after buying L.A. properties at or near their late-1980s peaks.
All told, the Japanese are expected to unload between $3 billion and $5 billion nationwide in U.S. real estate assets this year, according to E & Y; Kenneth Leventhal Real Estate Group. If the divestiture of L.A.-area properties is proportional with the amount of L.A. holdings in Japan's overall U.S. property portfolio, Japanese investors would unload between $450 million and $750 million in L.A. properties this year.
In keeping with Japanese investors' tendency to conduct business discreetly, officials at Shuwa and Nippon Life, which is selling the Century Plaza Hotel, declined comment. Officials of Japan Leasing, which is selling its leasehold on the ABC Entertainment Center, were unavailable for comment.
Especially notable is the selling going on by Shuwa, a huge Tokyo-based real estate investment company that went on an aggressive buying spree from 1985 through 1988, paying top dollar for trophy L.A.-area properties.
"Their assets are all top quality," Michael Zietsman, senior director of investment sales and finance at Jones Lang Wootton, said of Shuwa's portfolio.
Its highest-profile buy was Arco Plaza, the landmark twin 52-story towers in the heart of downtown's financial core. The towers were Southern California's tallest buildings and most prestigious addresses when they opened in 1972.
Shuwa bought Arco Plaza from Atlantic Richfield Co. and BankAmerica Corp. in late 1986 for more than $600 million at the time the biggest real estate deal ever transacted in Southern California.
Real estate sources said Arco Plaza would likely fetch $300 million to $350 million today.
When asked how much Shuwa might get for its downtown properties, veteran downtown broker Stephen Bay of Julien J. Studley Inc. said, "If they get 50 cents on the dollar, that would be exceeding my expectations."
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