USAA Real Estate Co., a subsidiary of San Antonio-based insurer USAA, is nearing a deal to buy the Transamerica tower in downtown Los Angeles for $120 million, according to sources briefed on the transaction.
If the deal for the 32-story building at 1150 S. Olive St. closes it will mark a hefty return for the partnership of New Pacific Realty Corp. and Earvin “Magic” Johnson’s Canyon-Johnson Realty Advisors, which spent about $100 million for the 565,000-square-foot tower, a smaller adjacent tower and several tracts of undeveloped land in mid-2003.
The partnership has already recouped about $45 million through the sale of the 225,000-square-foot building at 1149 S. Broadway to the city of Los Angeles and the raw land to housing developers.
The deal with USAA is still being negotiated, and sources said it was close, but not signed. In an e-mail, Bobby Turner, managing partner of Beverly Hills-based Canyon Capital Realty Advisors, a partner in the Canyon-Johnson group, wrote, “We do not have a binding agreement with anyone as of this time.”
Soon after buying the property, the partners held a splashy press conference to announce their intention to convert the centerpiece tower into condominiums. Later, they backed away from those plans and signed SBC Communications Corp. to a 10-year, 225,000-square-foot lease worth about $50 million.
USAA Real Estate buys and manages office, residential, industrial and hospitality properties for individual and institutional investors. The company manages 30 million square feet of office buildings across the country. Calls to a company spokesman weren’t returned.
Revving-Up
Tishman Speyer Properties Inc. is close to buying Beverly Mercedes Place for about $40 million, according to sources familiar with the transaction’s terms.
The 125,000-square-foot Beverly Hills property, at 9242-9250 Beverly Blvd., is anchored on the ground floor by Mercedes-Benz of Beverly Hills. Tenants such as literary agents Broder-Webb-Chervin-Silbermann lease high-end office space in the two stories above.
Prudential Real Estate Advisors subsidiary TMW Real Estate Group bought the building about seven years ago for more than $30 million. The building, which is nearly fully leased, has asking rents in the $3.50 a square foot range, according to the Beverly Hills Chamber of Commerce.
The deal would be another high-profile move for New York-based Tishman, which earlier this year sold Colorado Center, a 1.1 million-square-foot office park in Santa Monica, to a partnership of Equity Office Properties Trust and TIAA-CREFF for $443.6 million.
In August, Tishman agreed to pay $75 million for 6300 Wilshire Blvd., a 21-story tower near Crescent Heights Boulevard, near the L.A.-Beverly Hills border.
Calls seeking comment from Tishman officials weren’t returned. Prudential was represented by Eastdil Realty Co. and Madison Partners.
Going Public
After little more than two years in business, Woodland Hills-based Younan Properties Inc. has hired a team of investment banks to take it public.
Zaya Younan, the company’s chairman and chief executive, said he hopes to file his plans with the Securities and Exchange Commission in the first quarter of 2005 and begin selling shares late next year. Younan said the real estate investment trust would seek to raise about $500 million.
The company has a portfolio of 20 office properties with a cumulative 4 million square feet that Younan valued at about $450 million.
He said the firm will need to add another $500 million worth of real estate to its portfolio before the offering and that it was in the process of securing lines of credit to fund the acquisitions.
“Prior to the IPO we want to increase portfolio size,” he said. “As a result, the investment bankers who will take us public have arranged an acquisition facility off their own balance sheet which will allow us to go out an acquire more properties without depending on institutional investors or debt financing.”
Citigroup, UBS AG, Lehman Bros., Merrill Lynch & Co., Deutsche Bank and Goldman Sachs & Co. have been hired to underwrite the offering. Deloitte & Touche has been hired as the firm’s auditor.
Younan started the company by buying buildings with below-market occupancy levels, re-leasing them, lowering operating costs and then reselling.
In 2 & #733; years, the company completed 47 transactions of that type, including 10 in Los Angeles County.
“Even though some of our competitors have had difficulty operating in this market because it is so tight, we have been able to find assets and find value-added buildings,” he said. “We make the impact we are able to do on these properties and turn them around.”
Staff reporter Andy Fixmer can be reached at (323) 549-5225, ext. 263, or at
[email protected]
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