Aimco Offer for Casden Portfolio Too Good to Pass Up
Everything’s for sale for the right price.
So goes the reasoning behind Apartment Investment and Management Co.’s stunning $1.5 billion deal last week for Beverly Hills-based Casden Properties.
The Denver-based REIT’s deal for Casden’s portfolio of more than 17,000 residential units includes $213 million in Aimco stock, $166 million in cash and $684 million in debt assumption. Another $418 million will be payable when the 1,381 units Casden has under development at Park La Brea reach 60 percent occupancy.
Apparently, it was too good to pass up.
“There were other alternatives,” said Casden, who noted that Casden Properties had rejected the opportunity to go public. “We have no problem raising development capital, but this was the most exciting opportunity because of the strategic alliance with Aimco.
Casden, who formed Casden Development LLC with $320 million from the Aimco transaction, said the deal provides him with the best opportunity to fulfill his development goal of 5,000 Los Angeles-area rental apartment units over the next five years.
“We have a huge development pipeline,” said Casden, who noted that Aimco also has a 20 percent stake in the new company. “This allows us to concentrate us to do what we do best.”
Casden scoffed at the notion that difficulty in financing the aggressive development position prompted the sale.
“I don’t think anyone expected it,” said Mark McDonald, a senior investment advisor at Hendricks and Partners, which specializes in multi-family property sales. “But there are so many REITs and pension funds that would like to get a hold of what’s going on in L.A. that (Casden) may have been getting courted himself.”
Besides Park La Brea, Casden is expected to complete the development of a 350-unit apartment complex on Glendon Avenue in Westwood Village, which will be sold to Aimco at an undetermined price. The completion date is pegged at 2005, though the project has yet to receive entitlements and has been a source of contention within the local preservationists (one of the original apartment buildings built in Westwood in the 1920s sits on the property).
Law firm Jeffer Mangels Butler & Marmaro LLP has signed a 90,000-square-foot, 10-year lease deal reportedly worth as much as $35 million at 1900 Avenue of the Stars, taking it out of its present Fox Plaza headquarters.
The move, which will be made in August 2002, is expected to provide major cost savings for the law firm while pushing the property owner, San Jose-based Divco West Properties, closer to selling the nearly fully-leased, 600,000 square foot building.
The move will expand the 120-attorney firm’s offices by about 20 percent and allow it to achieve annual cost savings of about $2 million over its present lease.
John Moe, regional vice president at Divco West, confirmed the space and terms of the deal but would not give financial specifics. Divco was represented in-house by Moe, Sam Nicassio and Jeff Pion, and by Deron White and Lynn McCarthy of CB Richard Ellis.
Jim Travers and Jeff Mintz of Travers Realty represented the tenant on the deal.
Representatives from Jeffer Mangels did not return calls for comment.
“Fox continues to be extremely aggressive on their new deals and renewal rates, and it simply comes down to an economic decision,” said Blake Mirkin, first vice president at CB Richard Ellis in Century City.
Divco West bought both 1900 and 1901 Ave. of the Stars from Shuwa Investments for $200 million in 1999. After upgrading and leasing up 1901, Divco sold the 454,000 square foot property to Douglas Emmett Realty Advisors for $150 million this September.
Tax Code Prompts Deal
A set of retail properties split among the four corners of a Lakewood intersection was sold to a Woodland Hills-based firm for $31 million.
The 214,000-square-foot Lakewood Marketplace, at the corner of South Street and Woodruff Avenue, is made up of retail centers at each corner and includes tenants such as Marshalls, Sears and El Pollo Loco. Vons, Pavilions and Rite Aid own pads that make up an additional 75,000 square feet at the intersection and were not a part of the transaction.
In a deal made under section 1031 of the tax code, the buyer, Toibb Enterprises, bought the retail center to avoid a big tax hit on its sale of a Woodland Hills office building earlier in the year. Toibb sold that building for $21 million and was looking to use the proceeds to add to its 1 million square foot portfolio of mid-priced retail centers, according to Brian Forster, a principal at Told Partners, the agent for Toibb. Most of Toibb’s properties are in the western San Fernando Valley.
Sperry Van Ness Senior Vice President Reza Etedali, who specializes in retail center transactions, represented the seller.
In a 1031 exchange, a property seller can drastically reduce capital gains taxes by reinvesting the proceeds into a similar property within 180 days.
Northrop Grumman Corp. is looking for a quarter million square feet of commercial space in a South Bay office market that could sorely use the activity.
The Century City-based firm, whose FA-18 and Pegasus unmanned aircraft operations are currently in El Segundo, became the primary subcontractor for the $200 billion Joint Strike Fighter program when Lockheed Martin Corp. was awarded the primary contract Oct. 26. The Douglas Tech Center and the Candle Corp. building at 201 N. Douglas St. are two sites believed targeted by Northrop, which is expected to secure space for the 1,000 people associated with the project by the second quarter of next year.
While the expansion will help matters, it won’t be a panacea for a South Bay office market that has seen 1.4 million more square feet come on the market than has been absorbed since the beginning of the year. Vacancy rates were 16 percent in the third quarter, up from 12 percent one year earlier.
“It’ll reduce the available vacancy rate but is it gonna effect what the rental rates will be? I don’t think so,” said Jim Biondi, senior vice president at Grubb and Ellis Co. in Torrance.
Staff reporter Danny King can be reached at (323) 549-5225 ext. 230 or at