Beacon Close to Winning Bid for Purchase of BP Plaza

Real Estate
by Danny King

Beacon Capital Partners Inc. is close to a deal for BP Plaza, the 55-story office building at 333 S. Hope St. downtown, according to real estate sources.

While no price has been disclosed, sources estimate that the 1.4 million-square-foot property, which has been owned by Metropolitan Life Insurance Co. since 1984, will go for $270 million.

Key to the deal, said a source, is MetLife's apparent willingness to finance the acquisition of the building.

"They've got a good reputation of being a very good buyer," said one source of Beacon. "I think MetLife has a great desire to finance the deal."

MetLife financed Beacon's acquisition of its other L.A. property, the 660,000-square-foot Trillium office and retail development in Woodland Hills.

If the deal goes through, Beacon will have bested several other interested parties, including some of L.A.'s foremost office developers, among them Thomas Properties Group, Maguire Partners and McCarthy Cook & Co.

"It's a very smart purchase," said Tom Bohlinger, senior vice president at CB Richard Ellis. The estimated $193-a-foot price is far less than replacement cost for a downtown building, he said, and despite a projected cap rate in the 7 percent range, the quality of existing leases would enable financing cheap enough to make the deal work.

"Most people feel L.A.'s going to come back, but the question of when is critical. For this property, it doesn't matter," said Bohlinger.

Thelen Reid & Priest LLP signed a 12-year, 56,000-square-foot lease last month valued at more than $20 million, bumping occupancy above 90 percent.

Neither MetLife nor Beacon officials would not comment on the transaction.

The impending sale for BP Plaza could be followed shortly by a deal for Figueroa Plaza.

The owner of the two-building, 615,000-square-foot complex, a joint venture of Goldman Sachs Whitehall Street Real Estate Funds and Insignia Financial Group, has found a buyer for the property, according to downtown real estate sources.

The property at 201 and 221 N. Figueroa St. has been put on the market quietly, and could fetch more than $90 million. The towers were built in 1986 and 1991 and are fully leased, with rent in the $1.75 to $2 a foot range. The City of Los Angeles occupies more than half the complex, while law firm Lewis Brisbois Bisgaard & Smith LLP has 120,000 square feet.

Last month, the Goldman Sachs fund sold its 75 percent interest in Ernst & Young Plaza at 725 S. Figueroa St. to Trizec Properties Inc. in a deal worth about $110 million.

The partnership received as many as 20 offers on the building. The city was once rumored to be a potential buyer, but appears to have seen trumped by an out-of-town buyer.

Sun and Stars

Sun Valley is becoming Hollywood's back lot.

Entertainment service companies in the San Fernando Valley community recently signed two deals, for an aggregate 245,000 square feet of industrial space worth a combined $14.9 million.

Entertainment trucking and storage firm Western Studio Service Inc. signed a 10-year master lease for the 180,000-square-foot building at 9175 San Fernando Road for $9 million. They already had been leasing 1 million square feet in the San Fernando and Santa Clarita valleys.

"They'll be using about 48,000 square feet," said David Hoffberg, broker with Delphi Business Properties, who, with the firm's Stu Leibsohn, represented the landlord, Berendo Property. "They'll grow into the balance as the other tenants' leases roll over." CB Richard Ellis' Greg Barsamian represented Western Studio Service.

In the other deal, trailer company Movie Movers bought a six-acre site with 65,000 square feet of industrial development at 11473 Penrose St. for $5.9 million. The company will be consolidating its Van Nuys and Culver City operations.

"There's not much available in this size anymore," said Mike LaRocque, executive vice president of Daum Commercial Real Estate Services and buyer representative. "This is a property that was custom made for them."

Daum's Chris Sullivan represented the seller on the deal, Engilman Trust.

Retail Detail

Three local investment groups have teamed up on a $13.1 million purchase of retail space.

J & J; Warehouse Co. LLC, Newman Tek Capital LLC and J & E; Capital LLC bought 94,000 square feet of the 169,000 square-foot-Park Plaza on Maine shopping center in Baldwin Park from an affiliate of Costa Mesa-based Westar Associates.

The portion of the center acquired is anchored by a Sav-on and includes Kragen Auto Parts and an El Pollo Loco. It is fully leased, with rents averaging $1.60 a foot.

The purchase represents the first time the three partnerships have joined on a deal. The entities own properties in South Bay, the San Fernando Valley and Koreatown.

"We orchestrated the introduction," said J. Lawrence Han, managing partner of Pacific Allied Asset Management LLC, which manages the buyers' real estate portfolios and represented them on the deal. "They didn't know each other."

The seller, Baldwin Park Maine Associates, developed the 12-year-old center at Maine Avenue and Ramona Boulevard.

"It's the only major shopping center in the area," said Chris Maling, senior director at Marcus & Millichap. "It has a very strong historical occupancy."

At $13.1 million, the buyers are getting the property at about an 11 percent cap rate, a slight improvement over the 10 percent rate most retail properties get in the area, according to Han.

"They were doing a 1031 exchange, so time was running out," said Han of the seller. "They gave us a good bargain."

(A 1031 exchange enables a property owner to sell one property and acquire another without having to pay capital gains taxes on the transaction. The purchase has to take place within 180 days of the sale to receive the benefit.)

The remaining 75,000 square feet at the site is made up of pads owned by three tenants occupying the space a 56,000-square-foot Albertsons, Bank of America and the San Gabriel Valley Water District.

Cushman & Wakefield's A. Martin Morgenstern, Rick Hamilton and Jon Nesbitt represented the seller.



Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at dking@labusinessjournal.com.

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