The Real Deal Los Angeles

Done deal: Japanese investor ASO locks down Google’s hangar

Ratkovich and Penwood Real Estate sold property for $300M+; buyer is targeting more Calif. deals
By Hannah Miet and Cathaleen Chen | December 23, 2016 08:38PM

The Spruce Goose hangar (credit: Vashi Nedomansky) and ASO president Iwao Aso (via YPO)

Japanese conglomerate ASO Group closed Thursday on its purchase of the Google-leased Spruce Goose Hangar in Playa Vista. The investment firm, in a deal that was first reported by The Real Deal on Tuesday, paid between $300 million and $320 million for the hangar and three surrounding buildings. Sources familiar with the firm said ASO is targeting further acquisitions in California, looking at similar properties.

TRD reported on Tuesday that the seller, a partnership between Ratkovich Company and Penwood Real Estate Investment Management, was in advanced discussions to sell the property to a Japanese investor. The Los Angeles Times first identified the name of the buyer earlier today.

This is ASO’s first purchase in the United States, said Reid Mackay of Tokyo-based brokerage EGW Asset Management, who represented the firm in the deal.

The company, which was established in 1872, has more than 10,000 employees, according to its website. It invests primarily in infrastructure, private hospitals and healthcare. Its real estate investment strategy involves focusing on properties with long-term triple-net leases, and it has invested in properties in London over the last five years, including triple-net-leased hotels. Most of its holdings, however, are in Japan.

ASO “definitely wants to keep focusing on California,” Mackay said in an interview with TRD Friday. “They are looking for similar properties with long-term leases.”

HFF’s John Crump, Andrew Harper, Michael Leggett, Doug Bond, and Ryan Gallagher represented the seller, but did not respond to requests for comment. Representatives for Ratkovich couldn’t be reached.

Ratkovich and Penwood had been shopping the four-building, 358,000-square-foot complex at 12475 West Bluff Creek Drive, known as the Hercules Campus West, since October. Ratkovich acquired the Hangar, along with 10 other buildings, for $32.4 million in 2010.

Google, which has a base rent of  $11 million a year, can expand the hangar to over 500,000 square feet in its buildout of the space, according to marketing materials from October seen by TRD. Its rent is 50 percent below market-rate and will increase 3 percent every year.

The technology giant has an option to buy the hangar during the 16th year of its lease, which began in August 2016, according to the listing memo.