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The Real Deal Los Angeles

Colony NorthStar is Rising’s partner on $465M One California Plaza deal: sources

Partners also making a move on CIM-owned Two Cal Plaza
By Hannah Miet | May 25, 2017 05:00PM

One and Two Cal Plaza, Nelson Rising and Tom Barrack (Pinterest, Getty)

Tom Barrack’s Colony NorthStar is the equity partner behind Rising Realty Partners’ purchase of One California Plaza in Downtown L.A., The Real Deal has learned.

Rising entered contract in March to buy the 42-story, 1 million-square-foot building at 300 S. Grand Avenue for $465 million, as TRD first reported. At the time, it was unclear who was backing the purchase by developer Nelson Rising’s eponymous firm.

But sources said Colony agreed to put up the bulk of the money for the purchase of the tower from Beacon Capital Partners. It’s unclear what the exact amount of Colony’s stake is, but sources said Rising’s firm generally holds no more than a 15-percent equity stake. If that applies here, and if the buyers don’t bring in a third partner, Barrack’s firm could hold an 85-percent stake.

The deal is under contract and is expected to close by the end of next month, sources said. There’s chatter in the market about a potential third partner circling the deal, but that could not be verified.

Beacon paid $144.6 million for the property in 2013, according to CoStar Group data. It is roughly 90 percent leased, with tenants including Skadden Arps Slate Meagher & Flom, Bank of the West and Morgan Lewis & Bockius.

At $465 million, the per-square-foot price of $465 comes close to Downtown’s priciest office tower deal: the $486 per foot acquisition of Chase Plaza, Cushman & Wakefield data show.

Representatives for Eastdil Secured, which is brokering the deal, could not be reached for comment Thursday. Representatives for Rising and Beacon could not immediately be reached. Colony declined to comment.

Colony and Rising are also interested in buying Two California Plaza, the adjacent 52-story, 1.37 million-square-foot tower at 350 S. Grand Avenue owned by CIM Group. That building, where CIM recently locked down a massive lease with City National Bank, could sell for as much as $550 million, sources said.

Colony has significant property holdings nationwide, with $56 billion in assets under management as of March, according to its website. Barrack, a major backer and close friend of President Trump, has notably invested in troubled and delinquent loans, including on assets such as Michael Jackson’s Neverland Ranch in Santa Barbara. Construction is underway on a 77,000-square-foot Peter Marino-designed Bel Air mansion attached to Barrack, who filed plans for the project in 2014. But sources said he was not building it for himself, and was merely a “frontman” for the Qatari royal family.

Rising’s portfolio spans from older long-term-hold buildings to new developments. The firm bought the Garland Center  last year and is working on a renovation of One Bunker Hill. It bought the historic PacMutual building in DTLA for $60 million, and after giving it a creative office makeover, sold it for $200 million to Ivanhoe Cambridge and Callahan Capital Partners — a neighborhood record at the time.