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Friday, Sep 29, 2023

Real Estate Column

One of Hollywood’s biggest office buildings the 12-story tower at 7060 Hollywood Blvd. has just traded hands by way of a foreclosure action.

The new owner is Equimax Mortgage & Loan in Brentwood, one of the companies controlled by investor Ezri Namvar.

Equimax had purchased a mortgage loan on the property in early 1995 from West Hollywood’s First Credit Bank which had initiated foreclosure about nine months earlier.

The former owner, a group headed by Lavco Properties, had originally taken out the loan on the 1971-vintage, 160,000-square-foot building in 1987. American Savings Bank was the original lender to the tune of $12 million.

Title records indicate the outstanding balance was nearly $18 million as of early April, and that the property’s assessed value in 1995 was nearly $21.75 million.

A 1995 Chapter 11 bankruptcy petition by one of the partners in the building’s former ownership pegged the property’s value at $10 million.

Hollywood office broker Chris Bonbright with Ramsey-Shilling Co. said several parties are interested in purchasing the property from Equimax. Rising Westside office rents have convinced many tenants to stay in Hollywood.

Other Hollywood real estate sources noted that Equimax and Hollywood Arts Center, the owner of the twin tower next door at 7080 Hollywood Blvd., are battling for one of the 7060 building’s key tenants, Sound Deluxe.

Kilroy buys

Among the newest acquisitions of newly public office/industrial property REIT Kilroy Realty Corp. are a 91,000-square-foot office building in Calabasas and a 115,000-square-foot business park in Anaheim.

While officials at El Segundo-based Kilroy didn’t return calls regarding the acquisitions, the combined sales price likely exceeds $15 million, according to market sources.

The former owner of the two-story Calabasas office building at 26541 Agoura Road Pennino Broadcasting Corp. (formerly Pennino Music Co.) had faced a foreclosure action by mortgage lender Massachusetts Mutual Life Insurance Co. in connection with an $11 million mortgage taken out on the property in 1990.

Title records indicate that the loan’s outstanding balance was $10.45 million when Mass Mutual initiated foreclosure proceedings in January.

Much of the 1988-vintage building had been leased to Bank of New York to house former subsidiary ARCS Mortgage. After shutting down ARCS’ residential lending operations, BONY has subleased offices to the independently owned ARCS Commercial Mortgage and various other subtenants. ARCS Commercial Mortgage is planning to relocate to a nearby building now under construction.

Local real estate sources said Beitler Commercial Realty Services’ Tony Dorn brokered the sale of the Calabasas building through an arrangement that satisfied Mass Mutual’s claims against the property. But neither Dorn nor Mass Mutual would discuss the transaction.

Calabasas is seeing substantial “build-to-suit” development activity in response to strong demand from corporate and high-tech tenants, and even some concrete plans for “speculative” development (where construction commences without tenant pre-lease commitments).

As for Kilroy’s Anaheim acquisition, The Seeley Co.’s Tim Joyce represented both buyer and seller in that transaction involving a five-building R & D; “flex-tech” business park at 714 Ball Road.

Kilroy paid seller Stan Hanson $7.9 million for the project, which totals just under 115,000 square feet of floor space in its five concrete tilt-up buildings on 6.9 acres.

The business park was originally developed by Warmington Development Co., and it counts among its key tenants Westbourne Supply, the U.S. Postal Service, U.S. Elevator and Caltrans.

Kilroy’s initial earnings report noted that the company has contracted for or entered into letters of intent to purchase 12 office and industrial properties for a total purchase price of $155 million since its Jan. 31 initial public offering.

Software firm grows

Chicago-based computer software firm CCC Information Services has tripled the size of its L.A.-area operations by subleasing an 84,000-square-foot R & D; building in Glendora from Dynatech Corp.

Cushman & Wakefield Inc.’s John Minervini, who represented Dynatech in negotiating the $1.3 million, three-and-a-half-year sublease transaction, is also representing property owner Uhlmann Offices Inc. in negotiating a direct lease between CCC Information Services and the landlord for another three and a half years after the sublease expires.

The value of that lease will likely be substantially beyond the rental rate negotiated for the sublease with Dynatech, which vacated the property after the division that occupied it was sold, Minervini added.

Grubb & Ellis Co.’s Mano Leventakis represented CCC in subleasing the building at 2100 Alosta Ave. next door to the facility where the company now occupies less than 24,000 square feet and is also negotiating the subsequent direct lease with Sherman Oaks-based Uhlmann.

About 150 CCC employees will initially occupy the new building in Glendora.

Sprint builds

Long-distance carrier Sprint Communications Co. L.P. has purchased a parcel in the new Flower Street Business Park in Burbank, and will have a customized 50,000-square-foot industrial facility developed on the site.

Sprint will house a switching station within the $3 million facility to be located at 100 Flower St., which is scheduled to be ready for occupancy in the summer of 1998.

Flower Street Business Park developer Anses Joseph Co., headquartered in Tarzana, will develop the facility on a fee basis for Sprint.

Demand from the media-entertainment field in particular has reduced vacancies at Burbank-area commercial buildings to minuscule levels, and most of the area’s available industrial facilities have also been spoken for.

Grubb & Ellis’ Jim Linn and Michael Davin, the Flower Street park’s exclusive marketing agents, noted that seven buildings are under construction at the development, two of which are already leased and one of which has been pre-sold. The developer has decided to offer the other buildings only for lease.

David Abell of Arledge/Power Real Estate Group in Dallas represented Sprint in the land acquisition/build-to-suit negotiations.

Brad Berton covers the real estate industry for the Los Angeles Business Journal.

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