South Bay fitness aficionados will soon have a new Hawthorne option for their high-end exercise needs.
Equinox will open a fitness center this summer at 5400 Rosecrans Ave. after signing a 30-year lease at the property. The deal with landlord PAC-94 LP is valued at $33 million.
The deal for the four-acre property, which also includes a surface parking lot, closed in September. PAC-94 is a private investment group.
Equinox will occupy about 45,000 square feet of the 72,000-square-foot, two-story concrete office building. The gym will take up the entire second floor, a portion of the first floor and the roof, said Jim DeCarli, senior broker with Goodglick Co., who represented the landlord.
“They were looking for a location in the area,” said DeCarli, who added that the nearest Equinox gym is in West L.A. “They wanted to be in the Beach Cities area.”
The deal began taking shape in June 2006 when Equinox’s broker made contact with DeCarli and Goodglick Co. associate Dan Merritt. The Goodglick brokers said the building is appealing to Equinox because its concrete structure can accommodate weight rooms easily and the extensive activity that takes place at a gym.
“They immediately recognized the plusses for them,” said Merritt, also a senior broker with Goodglick Co. “They had been looking for some period of time prior and had not found a location.”
The per foot per month rental rate was not disclosed but Merritt said the deal was “pretty close” to market rate.
Equinox will spend over $10 million to renovate the building. DeCarli said Equinox could install a running track or basketball courts on the roof.
Equinox was represented by John Ayoob of CB Richard Ellis Group Inc.
Maguire Sale?
The REIT industry was abuzz last week in the wake of the Nov. 13 news that JMB Capital Partners LP, an investor in Los Angeles-based Maguire Properties Inc., had written a letter to Maguire asking the company to create a committee to look into the sale of the company. JMB owns a 5.2 percent stake in Maguire, the largest landlord in downtown Los Angeles.
After closing at $28.82 on Nov. 12, shares of Maguire were up initially on the news the next day to $30.01. But by market close on Nov. 15, shares had given up the gains and were back down to $28.86.
“This initial letter is as if two teams in a pro sports match are trash talking to each other during warm-ups,” said John Guinee, an analyst who covers Maguire for Stifel Nicolaus & Co. Guinee rates the stock a buy. “We would be surprised to see Maguire do anything publicly.”
Maguire spokeswoman Peggy Moretti said that the company had received the letter but declined to comment further.
In terms of more calls for a sale by shareholders, Guinee said it depends on whether stock owners in the hedge fund community “take an active, aggressive stand versus a passive stand.”
“We would fully expect them to take an aggressive stand,” he said.
Analysts have taken issue with the company’s financial position. It is highly leveraged since it bought a $3 billion portfolio of 24 Southern California properties from Blackstone Group LP earlier this year.
“The stock price is all about net asset value and the likelihood of there being a transaction (of the company), which unlocks that value,” Guinee said.
Maguire was put up for sale in fall 2006 but taken off the market by the end of the year when offers weren’t up to muster. Enigmatic CEO Robert Maguire is said to want to take the company private.
“Rob is an extraordinarily smart and capable person who will surround himself with smart and capable advisors as this drama unfolds,” Guinee said.
Sunset Strip Upgrades
Since purchasing the Sunset Millennium mixed-use project on the Sunset Strip in January from Apollo Real Estate Advisors LP for about $105 million, Broadreach Capital Partners LLC has set out to reposition the property.
The property at 8560-8580 Sunset Blvd. includes an office tower and retail complex. The retail building has already seen a host of changes, including the recent addition of an H & M; clothing store, which opened earlier this month. The development also has a new restaurant in Dolce Group’s Ketchup, and more dining options are in the pipeline. Some of the retail project’s second story space has been converted into offices and leased out to H & M; for the company’s regional offices, among other tenants.
“The goal was to reposition the center in a way that would attract the types of users and demographics for where it’s located the Sunset Strip,” said David Simon, managing director of Palo Alto-based Broadreach. A cosmetic upgrade of the retail plaza will break ground Dec. 1 and is expected to take four months to complete. The upgrade will include new lighting, landscaping and valet areas, Simon said.
The project’s 10-story office building at 8560 Sunset Blvd. is now 90-percent leased, Simon said.
Also, Simon said that his company is interested in purchasing the remaining portion of the original Sunset Millennium project, which New York-based Apollo still owns but has placed on the market. That property includes parcels entitled for two condo towers and two hotels.
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
