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Saturday, May 21, 2022

Dallas Firm Rustles Up Downtown L.A. Property

Downtown L.A.’s Wedbush Center is about to trade hands.

Lincoln Property Co. is closing a deal to purchase the 1000 Wilshire Blvd. property from a partnership of New York firms Lehman Bros. Holdings Inc. and Broadway Partners Fund Manager LLC.

Lincoln, based in Dallas, did not disclose the sale price but industry experts estimate the value of the deal at roughly $130 million, or $273 a square foot. It would be the highest sales price on a square-foot basis in the downtown market so far this year, according to CoStar Group Inc.

However, it’s unclear how much money the partnership will clear given the building was purchased as part of a portfolio from Beacon Capital Partners LLC in 2009.

The 476,000-square-foot, 21-story building is home to tenants including investment firm Wedbush Inc., which has building-top signage, and accounting firm Grant Thornton LLP. But it’s only about 70 percent leased.

Rob Kane, vice president of Lincoln, said he believes the vacancies result from the recent short-term and financially struggling ownership and that Lincoln will be able to provide stability and attract tenants.

“We are very bullish on downtown Los Angeles, especially where 1000 Wilshire is located in the financial district,” said Kane. “We think it’s an excellent opportunity for us to bring our strong sponsorship and active management to the property.”

Lincoln manages two other buildings in downtown but does not own any others. It had purchased 915 Wilshire Blvd. several years ago, leasing it nearly 100 percent up and then selling it for for $117 million to New York’s Brickman Management LLC in 2007.

In the Wedbush deal, Lincoln partnered with the Teachers’ Retirement System of the State of Illinois, which provided capital for the acquisition.

Unusual Auction

Ever wanted to own a trophy Glendale office building? Well, if you’ve got a computer and several million bucks, that dream could soon come true.

Buildings at 801 N. Brand Blvd. and 700 N. Central Ave. that downtown L.A. real estate investment trust MPG Office Trust Inc. let fall into foreclosure will be sold to the highest bidder on Auction.com, an Irvine-based commercial and residential real estate auction website.

Miami’s LNR Property Corp., which took control of the two Glendale buildings in February, is putting them up for auction May 23. The buildings are being marketed by Eastdil Secured LLC, a subsidiary of San Francisco’s Wells Fargo & Co., which is taking preliminary bids until May 3 to establish an opening price. From those bids, the brokerage will then invite interested parties to the final auction.

Foreclosed buildings are sold through auctions, but it’s highly unusual for pricey Class A office buildings to be auctioned off – and even more so on a website, acknowledged Auction.com Co-Chief Executive Eric Paulsen.

“Being the quality that they are, they’re going to gain a lot of attention,” Paulsen said.

By some estimates, the buildings could be worth about $50 million, but could go for even more. So far the highest price of any property sold on Auction.com was a multifamily portfolio that went for $55 million this year.

The two buildings are suffering high vacancies even by the standard of the Glendale office market, which recorded a 23.5 percent vacancy rate in the first quarter. The 283,000-square-foot property at 801 N. Brand is 65 percent leased; the 132,000-square-foot 700 N. Central building is about 40 percent leased.

LNR, which has a specialty in distressed real estate, took control of the building after paying off its discounted debt, held by multiple parties in the form of commercial mortgage-backed securities.

Big Shots

Two local real estate attorneys were behind three of the nation’s top 30 office sales last year.

Chauncey Swalwell and Stuart Graiwer, partners at Century City law firm Strook & Strook & Lavan LLP, represented JP Morgan Asset Management Holdings Inc. in three acquisitions, including the Horizon at Playa Vista campus last January.

The highest valued deal at $479 million ranked No. 9 on the list. It involved the acquisition last July of two Seattle office buildings, one of which is occupied by Amazon.com Inc., from Schnitzer West LLC. Another was the No. 13-ranked deal: California Public Employees’ Retirement System’s $415 million sale of the China Basin Landing office complex in San Francisco.

The purchase of the Horizon campus, for $294 million from Lincoln and ASB Real Estate Investment of Bethesda, Md., ranked No. 27.

Swalwell said he was pleased to see some of his large deals recognized but stressed the dollar amounts don’t change the way he thinks about transactions.

“We are in a position where we treat the deals that are this big almost the same as the ones that are 10 percent of that size, because they are both just as important to the client,” he said.

Staff reporter Jacquelyn Ryan can be reached at jryan@labusinessjournal.com or (323) 549-5225, ext. 228.

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