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The Real Deal Los Angeles

LA’s top 10 investment sales of 2017

Office deals top list, but industrial sales make a cameo
By Dennis Lynch | December 29, 2017 12:00PM

Disney Channel Building (part of Burbank Media District deal) and the SunAmerica Center (largest single asset deal) (Credit: Wikimedia Commons)

In a year when Los Angeles’ largest investment sales ran the gamut from industrial to residential to retail, Class A trophy office buys dominated the top 10 deals among hundreds of transactions in and around the city.

Investment giant Blackstone Group made the most appearances on our list, both as a buyer and a seller. The year also saw a number of firms buy back stakes in properties they sold in previous years. JMB Financial Advisors bought back Blackstone’s stake in the SunAmerica Center for north of $1,000 a foot, 18 years after selling it off. Denver’s Aimco also bought back a 47 percent stake in three Park La Brea apartment communities about a decade after selling it to JPMorgan Asset Management. The year also saw Principal Real Estate Investors cut a half-billion dollar deal with Blackstone for an industrial portfolio that one exec reportedly called “40 years in the making.”

Read on for a list of the biggest deals.

1.) Burbank Media District portfolio | $1.7 billion

Blackstone Group’s $1.7 billion recapitalization play for a majority stake in a suite of office properties in the Burbank Media District was by far the largest commercial deal of the year — and $400 million more than the priciest deal of 2016. Blackstone picked up a half-dozen properties from Worthe Real Estate Group totaling 3.3 million square feet, including some housing offices for Warner Bros., Walt Disney Co., Sony, Fox, DC Comics and DreamWorks, according to the Los Angeles Times. Worthe continues to manage the properties, and its namesake Jeffrey Worthe retained his 20 percent stake. The firm was able to fill up the district’s 32-story Tower property, which was vacant when it bought it in 2014 but is now 65 percent leased. The sale means Blackstone and Worthe control 70 percent of office space in the Burbank Media District. Eastdil Secured brokered the deal.

2.) SunAmerica Center | $856.7 million

JMB Financial Advisors made the city’s largest single-asset purchase in March when it paid Blackstone $856.7 million to take back a 39-story office tower it developed nearly three decades ago. Tenants at the 825,200-square-foot Century City high-rise include Bloomberg, Morgan Stanley and Wells Fargo. JMB had sold two-thirds of the SunAmerica Center, at 1999 Avenue of the Stars, in 1999 to Equity Office Properties Trust for $72.4 million. Blackstone scooped up Equity and the SunAmerica Center with it in 2007 in a $36 billion leveraged buyout. Eastdil brokered the deal.

3.) Pacific Corporate Towers | $611.2 million

Barry Sternlicht’s Starwood Capital Group made the largest move in El Segundo and the third-largest in L.A. with its September purchase of the 1.59-million-square-foot, three-building Pacific Corporate Tower complex on Sepulveda Boulevard. Starwood purchased the site from BlackRock and the General Motors Pension Fund, which renovated and rebranded the complex as “PCT” in 2014. It was Starwood’s second major move in El Segundo following its $174 million purchase in June of the Continental & Grand office complex from DivCo West.

4.) One California Plaza | $457.3 million

Rising Realty Partners, backed by equity partner Colony NorthStar, purchased Downtown’s One California Plaza in May just five months after Beacon Capital listed its trophy tower. Beacon purchased the 42-story, 1.1 million-square-foot high-rise in 2013 for $144.6 million and sold a 49 percent stake to Madison International Realty for $295 million later that year.  One California Plaza is 90 percent leased and home to tenants including Skadden Arps Slate Meagher & Flom, Bank of the West and Morgan Lewis & Bockius. Credit Suisse lent the new owners $300 million in November to pay off an existing $288 bridge loan on One California Plaza. Eastdil represented Beacon in the sale.

5.) Park La Brea portfolio | $451.5 million

The Denver REIT Aimco bought back from JPMorgan Asset Management a 47 percent stake in a trio of apartment communities at the massive Park La Brea complex it developed over a decade ago, giving it full control over the properties.  The properties include 1,381 units across 12 four-story buildings. The sale price made it by far the largest residential investment sale of the year. Aimco developed the buildings between 2002 and 2004 and has been the operator there since. JPMorgan bought its stake a decade ago. Aimco CEO Terry Considine said in a release that his company expects “to redevelop each, over time and at the right time, to service different and distinctive market segments.”

6.) Principal Real Estate Investors industrial portfolio | $447.5 million

Principal Real Estate Investors cashed out big time when it sold 4 million square feet of industrial properties to Blackstone for half a billion dollars in October, a month after buying 46-year partner Majestic Realty out of 16 co-owned properties worth $111.5 million. The sale netted Principal $411 million after taxes — a gain “40 years in the making,” Principal CFO Dieanna Strable-Soethout told the Wall Street Journal. The properties included warehouses, distribution centers and other logistics-sector properties, adding to the West Coast-centric logistics portfolio it purchased from LBA Realty last year for $1.5 billion.

7.) Two-building Santa Monica residential portfolio | $362 million

Blackstone’s second major sale of 2017 came in April, when the investment firm sold two Santa Monica office buildings to a joint venture between Douglas Emmett and the Qatar Investment Authority. Blackstone’s $285 million sale of the 11-story, 205,700 square-foot Wilshire Palisades building on Ocean Avenue at $1,470 per square foot made it the highest per-square-foot sale in Santa Monica, significantly higher than the $238 million TRD sources predicted. The other building sold in the deal was the 87,000-square-foot property at 429 Santa Monica Boulevard.  It wasn’t the first time the three parties have done business together. In 2016, the joint venture purchased a Westside office portfolio from Blackstone for $1.34 billion.

8.) Primestor Development shopping center portfolio | $345 million

Maryland-based Federal Realty Investment Trust made the biggest retail investment purchase of the summer, paying Primestor Development $345 million in August for a stake in seven retail properties around the city. The deal was for a 90 percent stake in five of the properties, full ownership of the Olivo at Mission Hills project in Hickson, and a joint 25 percent stake with Primestor in the La Alameda center in Walnut Park. As part of the deal, Federal threw $20 million toward the redevelopment of Olivo at Mission Hills. Just over $91 million of Federal’s investment went toward the 327,000-square-foot Bell Gardens Marketplace in Bell Gardens, the largest of the seven properties. Primestor will continue to manage and lease the properties. In February, the retail REIT also purchased the Hasting Ranch retail plaza in Pasadena for $29.5 million.

9.) DreamWorks Animation headquarters | $292.3 million

In November, a consortium of South Korean investors led by Hana Asset Management and Ocean West Capital Partners bought the DreamWorks Animation studio headquarters in Glendale. The 15-acre property includes five buildings totaling 460,000 square feet of space. The deal pencils out to around $600 per square foot. DreamWorks sold the studio for $185 million in 2015 to a SunTrust subsidiary, which quickly turned around and sold it to El Segundo-based Griffin Capital for $215 million. The animation company, now owned by Comcast Corporation, has a 16-year lease and is staying put, according to the Times. Newmark Knight Frank brokered the deal.

10.) Toyota Motor Corp.’s headquarters | $270 million

Rounding out the top 10 investment sales of the year is Toyota Motor Corporation’s sale of its sprawling former headquarters in Torrance to Sares-Regis. The Japanese car giant put the 2-million-square-foot property on the market in February. The property covers 110 acres and includes 18 buildings, some of which will come down and be replaced, Peter Rooney, president of Sares-Regis’s Commercial Development Division, told the LA Times. Rooney said the company will build retail space and possibly a hotel on the campus, adding the redevelopment could shoot the property’s value up to to half a billion dollars in a few years time. JLL brokered the deal.

Harunobu Coryne contributed reporting