The developers of a proposed convention center hotel are getting a little less public support to get the project off the ground.
Drawn-out negotiations between Wolff Urban Management Inc., the construction arm of hotel investor Lew Wolff, and the city’s Chief Legislative Analyst’s office have resulted in a different public benefits package.
The new proposal, currently being written the City Attorney’s Office, is likely to go before the City Council’s ad-hoc convention center hotel committee within the next couple weeks.
The tentative deal would cap the amount of city lodging taxes that can be used to finance the 1,200-room hotel at $140 million. In exchange, the city has extended to 25 years the time in which developers can use bed taxes to help finance the project. That’s an increase of five years from the original proposal.
Once the cap is reached, the city would begin collecting the taxes. Additionally, the city is no longer providing $10 million for infrastructure improvements, and the terms of a $22 million loan have been altered so that redevelopment money is used instead of general fund dollars. There also are guarantees that the public is repaid even if the hotel project falters.
While Los Angeles officials still propose waiving building and permit fees for the project, that money will have to be paid upfront and will be refunded once the hotel is open for business.
Earlier this year the council approved a $177 million package that would rely on the developers using the hotel’s lodging taxes over a 20-year period to help finance the project. The time frame would have allowed developers to collect more than they needed if the money was recouped at a faster rate than city analysts believe.
Capping the amount of tax revenue for the convention center hotel has been a popular proposal from Council President Alex Padilla. The changes are intended to protect the city if the developer defaults.
“It’s almost perfected now,” Wolff said. “The deal now relies less on loans.”
Filling a hole
Equity Office Properties has nearly back-filled a large vacancy created at a Westwood Village office building when Walt Disney Co. and billionaire Haim Saban sold the Family Channel to News Corp.
The subsequent 300,000-square-foot vacancy has left the building at 10960 Wilshire Blvd. nearly two-thirds empty since 2001.
Equity, the nation’s largest office landlord, inked a 77,000-square-foot lease with Sony Pictures Entertainment, the studio’s television arm. Terms weren’t disclosed, but sources believed the five-year deal is worth close to $11 million.
Steve Walbridge, Carl Muhlstein, Eric Olofson of Cushman & Wakefield Inc. represented Sony.
Equity is in advanced talks with Internet service provider Earthlink Inc. to take two floors of space that could fill another 50,000 square feet in the building, according to sources. A standard 10-year deal could be worth about $13.5 million, the sources said.
Also recently signing on are Infospace Inc., which has entered a lease for 25,000-square feet that sources said could be worth $4 million. Law firm Wood Smith Henning & Berman LLP also inked a deal to occupy 25,000 square feet, which sources pegged at $8 million. Nathan Piehl of Equis Corp. represented InfoSpace and Mike McRoskey and Frank Scott of CB Richard Ellis Inc. represented the law firm.
And, as previously reported, Gannett Co. Inc. signed a seven-year lease for 11,887 square feet worth $2.5 million.
Frank Campbell, Equity’s vice president of leasing, said large tenants like the Family Channel are rare for Westwood, where most tenants tend to be moderate in size.
He said the smaller-sized tenants also reduces the risk of having one major user close their doors, leaving a large vacancy that can take time to replace.
“Sometimes with big tenants, which Saban/Disney was, it’s good while they’re there but it can be a lot of work to backfill when they leave,” Campbell said. “Westwood historically has been a small- to mid-size tenant market. Disney was somewhat of an anomaly.”
The building’s leasing team, which represented EOP in all four lease transactions, includes Chris Houge and Rick Buckely of Madison Partners and EOP’s David Hitzel.
Swinging South Bay
The South Bay continues to heat up with Northrop Grumman Corp. inking a $12.5 million lease for El Segundo’s Douglas Technology Center.
The four-year deal with landlord Overton Moore Properties Inc. fills the 216,617-square-foot building at 445 N. Douglas St., where Northrop plans to use 45,000 square feet for light industrial manufacturing and the remainder to house engineering workers.
Northrop engineers occupy large swaths in adjacent buildings, and the Douglas Technology Center is considered an extension of the existing campus.
Northrop was represented by Brad Vickery of GVA Daum, and John Ayoob and Bill Bloodgood of CB Richard Ellis Inc. represented the landlord.
Meanwhile last week, Learning Tree International Inc. inked a $4 million deal to take 34,374 square feet at MetLife Inc.’s 400 Continental Blvd. The corporate technology training firm is moving its offices from Arden Realty Inc.’s office building at 6053 W. Century Blvd. Learning Tree was represented by CBRE’s Stan Gerlach and John Ayoob, while Bloodgood handled matters for MetLife.
In the same building, Douglas Furniture of California LLC signed a $1.5 million, five-year lease for 13,514 square feet. Combined, the two leases shrink the vacancy at 400 Continental Blvd. to 5 percent. The residential furniture outfit was represented by Gerald Kim and Terry Reitz with Grubb & Ellis Co. and Bloodgood represented the landlord.
For the Record
An item last week regarding the Carlyle Group deciding to sell its One Wilshire building omitted a brokerage working on the transaction. The building is co-listed with Eastdil and Madison Partners.
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
[email protected]
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