CresaPartners brokers Dave Toomey and Brian Davies had considerable leverage with Equity Office Properties in a recent lease they negotiated for Singer Lewak Greenbaum & Goldstein LLP. They put that leverage to work, getting the accounting services and consulting firm a favorable renewal.
The 10-year deal for the entire seventh floor of 10960 Wilshire Blvd. in Westwood is valued at $9.81 million. The 25,258-square-foot lease starts at $3 per square foot per month on a full-service gross basis and escalates annually by 3 percent.
That’s below the asking rate of $3.85 per square foot per month for the upper floors and the $3.25-$3.50 asking rate for the lower floors of the 24-story building.
It’s also less than two leases signed in the Class A building late last year. Those leases, for tenants Nigro Karlin Segal & Feldstein LLP and Wasserman Media Group, started in the low-$3-per-square-foot range.
Broker Hunt Barnett, who represented Equity Office, said the CresaPartners brokers had knowledge of those transactions.
“These folks had a very good broker and knew terms of the Nigro Karlin and Wasserman deals and they negotiated for some of those things,” said Barnett of L.A. Realty Partners.
Singer Lewak’s brokers employed another tactic. In 2009 they exercised an early termination clause in the accounting firm’s lease. By exercising the right, the lease, slated to end summer 2013, reset to terminate this summer.
“It allowed us to seriously evaluate all of the viable options in the marketplace,” Toomey said. “Equity Office had to take us seriously and offer us a compelling deal.”
The accounting firm downsized by about 12,000 square feet. It is moving from floors 11 and 12 once construction of its new offices is completed later this year.
Equity Office declined to comment.
Peter Best, Beau Rawi and Karly Nolen of L.A. Realty also represented the landlord.
Tough Deal
Multifamily real estate investment firm Westgate Group Inc. was recently forced to sell a 98-unit apartment complex it built in 2009 in Sherman Oaks after being unable to get permanent financing to replace the project’s construction loan.
The May 22 transaction underscores the notion that despite some improvement in the economy, credit markets remain tight while the rental market is still soft.
John Lu, owner of the West L.A. company, said he would have liked to retain the building at 15357 Magnolia Blvd. until the market recovered. Instead, he sold to real estate investor Avi Rojany for $23 million.
“It’s not exactly what I wanted. But at this particular juncture, it’s difficult to get a take-out loan to cover the construction loan,” said Lu, who added his problems were compounded by rental rates 15 percent lower than initially projected.
The building was once appraised to fetch $28.5 million at full occupancy, said Clark Everitt, a broker with Investment Real Estate Associates who represented both parties. The building has been open for about nine months and was 70 percent leased when the deal closed.
Rojany believes he bought the property at 70 cents on the dollar, considering land and construction costs.
“It’s a nice building,” said the West L.A. businessman.
The building has 39 one-bedroom units, 57 units with two bedrooms and two with three bedrooms. Everitt said the average monthly rent for the one-bedroom units is $1,600 and $2,000 for the two-bedroom units.
Everitt’s brother, William Everitt of IREA, also represented both parties.
Local IPO
Last Thursday, shares of real estate investment company Hudson Pacific Properties Inc. began trading on the New York Stock Exchange after a $218 million IPO.
Founder Victor J. Coleman was already touting his Brentwood company, which owns suburban office buildings, and infill media and entertainment campuses.
Coleman, who serves as chairman and chief executive, said the company planned to make acquisitions worth a minimum of $300 million in the next one to two years. It plans to focus on underperforming office properties.
“The amount of growth we foresee in the suburban portfolio will far exceed the new-media, entertainment portfolio,” Coleman said. “We are going to buy a lot more office.”
Hudson, which has a 2 million-square-foot California portfolio that includes Sunset Gower Studios in Hollywood, priced shares at the bottom of the expected range, reflecting the ongoing weakness in the market.
The company’s prospectus had given a range of $17 to $19 per share for the pricing. Shares were released to the market at $17 and were bid up to $17.40 by the close of trading June 24.
Hudson is structured as a real estate investment trust, which requires it to return 90 percent of its profits to shareholders in the form of dividends.
Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.
