Many real estate investors look at distressed urban property and see a money pit. CIM Group Inc. sees the chance to acquire lots in bunches and create a unified district.
It worked in Santa Monica in the mid-1990s, when CIM bought five buildings on the Third Street Promenade. It worked in Brea a few years later when CIM developed 11 parcels along Birch and Brea boulevards to spearhead a downtown resurgence.
CIM has now turned its attention to Hollywood, where it has assembled a 1 million-square-foot portfolio that ranges from a shuttered 10-story office tower built in the 1920s to the struggling Hollywood & Highland complex, purchased for $201 million.
Instead of trying to attract the tourist crowd as TrizecHahn Corp. did in spending $615 million (including $90 million in Los Angeles city subsidies) on Hollywood & Highland CIM is attempting to bring out the locals.
The area has seen an influx of upper-middle class residents, many of them singles, who could become Hollywood & Highland customers if the retail mix were improved.
"We believe the best way to make tourists want to visit and spend money in a center is to make sure that the local neighborhood is excited," said Development Principal John Given.
Several fashion-oriented retailers are being brought in, including Lucky Brand, BCBG and American Eagle. "We will be announcing a new music store very shortly," Given said.
CIM founders Shaul Kuba, Avi Shemesh and Richard Ressler formed their partnership in 1994, targeting densely populated, blighted urban areas that had potential to improve.
Kuba and Shemesh had gone to school together in Israel, starting construction companies in L.A. that later merged into a building and development firm.
They met Ressler in 1987, when the semi-retired former vice president at Drexel Burnham Lambert hired them to landscape his home. Over time the three decided to go into business together. After buying a building in Santa Monica, the partners went after large investors, including state pension funds.
CIM turned its attention to Hollywood Boulevard in the late 1990s, after public and private investment began to gain momentum. It attracted Gemstar-TV Guide International as a tenant in the old Bank of Hollywood building.
The group has sought to build a cohesive district that will result in rising rents. They attended homeowner meetings to find out what kind of retail the residents wanted to bring in.
It's still unclear how many of CIM's Hollywood projects will pan out. So far the company has only been able to make cosmetic changes to Hollywood & Highland and the Hollywood Galaxy. Meanwhile, several years after buying the 19-story Sunset and Vine Tower, CIM is still working on converting the fire-damaged high-rise into condominiums.
Staff reporter Andy Fixmer contributed to this story.
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