The 1 million-square-foot Wilshire Courtyard complex that has led the pack in the rising office markets in the Miracle Mile and Mid-Wilshire has been sold.
New York-based Blackstone Real Estate Advisors is in escrow to sell its stake in the complex to PaineWebber Real Estate Fund I, part of an estimated $500 million transaction that includes two other properties, one in San Francisco and one in Costa Mesa.
McCarthy Cook & Co. remains in the partnership under the recapitalization deal.
The two-building, 967,000-square-foot Wilshire Courtyard was built in 1987, one of the largest office complexes built during the last economic cycle.
The Blackstone-McCarthy Cook partnership bought the mortgage in 1998 after a partnership lead by J.H. Snyder Co. filed for bankruptcy protection in 1997.
Since then, Tom McCarthy and Ed Cook, former executives with Maguire Thomas Partners, have taken the half-leased Wilshire Courtyard and filled it with tenants such as E! Entertainment and The Interpublic Group of Cos. Inc.'s Initiative Media, which is getting ready to expand to 130,000 square feet from the 75,000 it now occupies. That must-take deal involves space recently vacated by the Jewish Federation. Other tenants include entertainment industry publication Variety, Viacom's Spelling Entertainment, the Los Angeles Business Journal, and the L.A. offices of Elkor Realty Corp.
Monthly rents at the Wilshire Courtyard are running about $3 a square foot today, compared to $2.40 when Initiative Media signed its 15-year lease two years ago, McCarthy said.
"The market has changed dramatically," he said.
Aside from the strong market conditions, other factors contributing to the complex's success, according to McCarthy, have been entertainment and publishing tenants' desire to be where the labor pool is strong.
"This Miracle Mile submarket has in the past five years solidified as the home for a lot of these types of companies," McCarthy said.
Blackstone, PaineWebber and McCarthy & Cook officials declined to provide financial details of the transaction, but sources close to the deal noted that the overall portfolio sale was very profitable for Blackstone.
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