Canadian Insurer Takes on Entertainment Tenants

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The West L.A. building that houses 20th Century Fox Film Corp. and BBC Worldwide Americas Inc. was sold this month for $39.5 million.

Canadian insurance company Sun Life Assurance Co. bought the 101,000-square-foot property at 10351 Santa Monica Blvd., known as Comstock Plaza, from a joint venture of Beverly Hills real estate investment company Cambra Realty and New York hedge fund Angelo Gordon & Co.

The venture bought the property for $35 million in 2008 specifically with an eye toward improving it for resale. The renovation of the 28-year-old building has been completed and the ground floor was leased to restaurant SmithHouse, according to Bob Safai, president of L.A. brokerage Madison Partners, who represented the buyer.

The insurance company was pleased to scoop up the building, which provides strong cash flow to its owner, Safai said.

“They get a footprint in a great building in a great location with a stellar tenant roster and there’s very little risk,” he said. “It’s a win-win transaction.”

The building, 97 percent occupied, has large operational windows and exposed ceilings, an attractive amenity for creative companies. It’s also walking distance to the Century City Westfield mall.

Madison Senior Executive Director Matt Case also represented the buyer. The sellers represented themselves in-house.

Family Sale

A 75,000-square-foot office building in Toluca Lake traded hands for $15.2 million this month.

The Universal Court property, at 4130 Cahuenga Blvd. at Lankershim Boulevard, was sold to a New York investment group that has become active in Southern California real estate over the last two years. It operates under the name Cahuenga Pacific LLC.

The seller was a Hancock Park family that purchased the building for about $12 million a decade ago as part of a 1031 exchange, which allows an owner to trade one property for a similar property without having to pay a capital gains tax. The property had been purchased by the father, who has since passed away, and the family was ready to sell the building.

“The timing was right to move on,” said Martin Cohan, Marcus & Millichap Real Estate Investment Services vice president, who represented the seller.

The new owner bought the building because of its tenant mix and proximity to the movie studios, Cohan added. It is about 80 percent leased. Among its largest tenants are entertainment companies A. Smith & Co. Productions, Performance Post Inc. and RSPE Audio Solutions.

Cahuenga Pacific intends to significantly renovate the property, which was built in 1984.

“They are interested in putting money in Southern California real income-producing property,” he said.

Matthew Ziegler, a vice president of investments in Marcus & Millichap’s Encino office, represented the buyer.

Mixed Reviews

The slow economic recovery will breathe life into the L.A. industrial real estate market this year.

That’s the conclusion of brokerages CBRE Group Inc., Jones Lang LaSalle Inc. and Grubb & Ellis Co., which all agree that industrial occupancy and rental rates will improve over the next 12 months.

In fact, Grubb believes the L.A. industrial market will be the No. 1 metropolitan market in the country for industrial investment opportunities over the next five years.

The brokerages cite the economic recovery and increasing trade as a contributing factor to the improving market. Arthur Jones, senior managing economist at CBRE, noted the surprising strength of the U.S. manufacturing sector.

“L.A. will continue to benefit from increased trade. We have exports above prerecession levels and every month is a new record,” Jones said in an interview. “Last quarter, nearly 5 million square feet (of industrial space in Los Angeles County) was absorbed and that was the highest since 2005.”

The commercial office market is another story.

CBRE predicts that occupancy rates in L.A. offices will drop by more than a full percentage point as newly built office space remains on the market and joblessness remains high.

“In terms of other large office markets like New York and Boston, L.A.’s really kind of one of the weaker markets right now,” Jones said. “Our outlook is weak.”

JLL, however, is more optimistic. It believes the L.A. office market already hit bottom and will slowly recover throughout the year. The brokerage cites a decline in companies downsizing and more lease renewals among existing tenants.

Staff reporter Jacquelyn Ryan can be reached at [email protected] or (323) 549-5225, ext. 228.

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