The Real Deal Los Angeles

Edward Minskoff is buying the Bluffs at Playa Vista from JPMorgan for $425M

New York investor and developer will pay $850 a square foot for creative office property: sources

July 27, 2016 09:30AM
By Hannah Miet and Katherine Clarke

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Edward Minskoff and the Bluffs at Playa Vista

Edward Minskoff and the Bluffs at Playa Vista

The East Coast is leaning in on L.A.’s Silicon Beach.

Hot on the heels of Boston Properties’ acquisition of the Colorado Center in Santa Monica, New York developer Edward Minskoff is going into contract to buy the Bluffs at Playa Vista creative office campus from JPMorgan for roughly $425 million, The Real Deal has learned.

The deal for the buildings at 12121 and 12181 Bluff Creek Drive is expected to close in early August, as Minskoff Equities finishes negotiations regarding debt on the property, sources said. A spokesperson for JPMorgan did not immediately respond to a request for comment. Minskoff declined to confirm the deal.

Local industry insiders called it a risky acquisition. Sources were surprised the 500,000-square foot two-building office complex, nestled in 15 acres of land, sold for a high $850 a square foot.

While it’s a high-end property in a smoking hot office market that has seen similar pricing, it carries the risk of a single-tenant facility. Fox Interactive Media rents or subleases 90 percent of the fully-leased space. When Fox’s lease expires in 2021, it is unlikely to renew the whole space. As it stands now, Fox’s offices at the Bluffs are not fully utilized, sources said. It could even abandon the Bluffs entirely, leaving the landlord with hundreds of thousands of square feet to fill.

Sources said the usual suspects for properties such as the Bluffs — institutional buyers like Invesco and Tishman Speyer who hunt creative office product on the Westside — sat on the sidelines this time around. Whether they were put off by the risk or by the timing in the cycle is unclear.

What is clear is that risk to some means opportunity to others. Minskoff is about to have a West Coast trophy property on his hands at a very East Coast price.

Minskoff, a major player in the New York market, founded his Edward J. Minskoff Equities in 1987. The privately held real estate investment and development firm owns and manages almost six million square feet of office, retail and residential space, according to TRD‘s research. Its best known asset is perhaps 51 Astor Place, a 13-story, 430,000-square-foot building comprising an entire block between Third and Fourth avenues in Manhattan. Minskoff completed construction on the glassy complex in early 2013, and leased it up two years later when IBM took 25,401 more square feet.

Eastdil secured represented J.P. Morgan in the L.A.  deal, but could not be reached for comment.

The Bluffs campus was developed by Lincoln Property Company, who sold it to JPMorgan for $294 million, or $587 a square foot, in 2011.

Playa Vista has seen a lot of steep trades lately. Vantage Property Investors just sold Playa Jefferson, the 200,000-square-foot creative office campus that’s home to Facebook’s largest L.A. office, to Rockwood Capital for $165 million, The Real Deal previously reported. That price amounted to $843 a square foot.

Minskoff is just the latest New York developer to target the L.A. market. East Coast development firms Witkoff Properties, Boston and Simon Baron Development have all made a splash on the West Coast in the past few months. Witkoff is building the Edition Hotel in West Hollywood, while Simon Baron is redeveloping the Hotel Cecil near Skid Row in Downtown L.A. into micro-apartments. Boston’s deal for a 50 percent stake in the Santa Monica complex for about $500 million marked its first purchase in Southern California.