New Yorkers this week will hold the keys to a huge chunk of the office space in downtown Los Angeles.

Almost six months after announcing it would buy troubled downtown landlord MPG Office Trust Inc., Brookfield Office Properties Inc. was scheduled to close the acquisition Oct. 15, it announced last week.

Brookfield’s newly formed fund DTLA Holdings combines MPG’s former assets with properties Brookfield already owned downtown, including a 52-story building at 601 S. Figueroa St. The portfolio includes seven Class A office buildings totaling about 8.3 million square feet.

In the months before the acquisition, real estate experts expressed concern that Brookfield would own about 42 percent of all Class A office space in downtown, allowing it to have an outsize impact on lease rates.

Tony Morales, a managing director at Jones Lang LaSalle Inc.’s downtown office, said that while he thinks Brookfield will bring a level of intellect and capital to the market that MPG lacked, he doesn’t think it will bring steep rate hikes.

“Brookfield’s vacancy rate preacquisition was just under 8 percent, but postacquisition their vacancy rate is going to go up to 19 percent,” he said. “So until their portfolio firms up, I don’t think they’ll have the ability to reduce concession packages. I don’t believe there’s going to be any material change in Class A rates.”

Brookfield first announced its $180 million acquisition of the struggling L.A. office owner in April. In June, it launched a cash tender offer to purchase all outstanding preferred stock in MPG for $25 a share. Common shareholders received $3.15 a share and approved the deal in July. The total deal, including assumption of debt and net cash proceeds from the sale earlier this year of MPG’s U.S. Bank Tower, was valued at about $2.2 billion.

Raceway Redevelopment

NASCAR fans in the San Gabriel Valley might need to find a new place to watch their favorite drivers round the track after next season.

Irwindale Speedway, a short-track auto-racing venue off the 605 freeway, sold earlier this month to Lindom Co., a downtown L.A. real estate firm with plans to begin redeveloping the property as early as January 2015. Lindom bought the nearly 64-acre property from Arcadia’s Nu-Way Industries Inc., which had owned the land since 1966. Industry sources estimate the transaction, which closed Oct. 1, was valued at about $22 million.

Jim Mnoian, president of Nu-Way, said his father built the double oval racetrack and grandstand in 1998, then added a drag strip two years later.

The venue also has a 6,000-square-foot race training center, grandstand seating for 10,000 people, concession stands, a garage, administration buildings and an expansive paved parking lot.

Chris Atkinson, a managing partner at Lindom, said the company would release details about its planned project in coming months.

“There are very few 64-acre sites in the greater L.A. area, let alone on a major freeway with immediate ramp access,” he said. “To own a site like that – not only for its existing use but for future development – is a great opportunity.”

Ed Matevosian, a vice president at CBRE Group Inc., represented the seller.

Fairfax Expansion

A.F. Gilmore Co., the company that has long owned and operated the Original Farmers Market, recently expanded its presence in the Fairfax district.

The family-run real estate company purchased a four-story office building at 145 S. Fairfax Ave. late last month from Kennedy Wilson Properties. Both parties declined to disclose the sale price. The 55,000-square-foot property, across the street from the popular market, was last sold two years ago for $13.5 million. At the time of the sale to Gilmore, the building was only about 42 percent leased. Tenants included National Bank of California and U.S. Bank, according to CoStar Group Inc.

Hank Hilty, Gilmore’s chief executive, said the company plans to renovate the property, upgrading its exterior with an aluminum façade, canopies, landscaping and energy-efficient lighting.

Gilmore, which now owns about 34 acres of land in the Fairfax district, owned as many as 256 acres more than a century ago. In addition to the Original Farmers Market, it owns much of the surrounding land in the area, including land beneath the Grove retail center leased to developer Caruso Affiliated.

Staff reporter Bethany Firnhaber can be reached at bfirnhaber@labusinessjournal.com or (323) 549-5225, ext. 235.

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