After 18 months on the market, Downtown Los Angeles’ iconic U.S. Bank Tower has secured a buyer at a significant discount to its pre-coronavirus valuation.
The seller, Singapore-based investment management firm OUE Limited, announced the $430 million sale and purchase agreement Friday. The buyer, USBT Property Owner LP, was identified only as an “institutional purchaser.”
New York-based Silverstein Properties and other U.S. firms had been reported to be interested in the property. OUE disclosed the commencement of exploratory discussions with a prospective buyer last month.
When the 72-story office tower at 633 West Fifth Street hit the market last year, the seller was reported to be seeking a price of around $700 million. In OUE’s latest annual report, the 1.4 million-square-foot property was valued at 881 million Singapore dollars or about $633 million.
The agreed sale price reflects “the current US property market conditions in the relevant sectors amid the Covid-19 pandemic,” according to OUE’s announcement.
The sale is expected to close in September, and the buyer has made a $10 million deposit. Closing may be extended by one month in exchange for an additional $5 million deposit.
The sale will allow OUE to “streamline its asset ownership in a period when the longer term outlook of the U.S. property market may not be favourable,” the announcement said, noting that rental income from the property has been impacted by coronavirus.
The proceeds from the sale may be recycled into “higher growth reinvestment opportunities” or increase cash reserves amid the uncertain economic climate. OUE owns properties in several Asian countries, including Singapore, China, Japan and Indonesia.
U.S. Bank Tower was built in 1989, and OUE acquired the property for $367.5 million in 2013. OUE renovated the property and added an observation deck featuring a 36-foot long glass slide, known as OUE Skyspace LA. OUE is also in discussions with buyers to sell its leasehold interest in the observation deck, as well as its liquor license.
OUE Commercial Real Estate Investment Trust was offered the right of first refusal on the sale, but declined the offer because “the proposed terms would not be accretive” to its distribution per unit.
Contact Kevin Sun at [email protected]