A month before the coronavirus sent office workers home for an extended experiment in remote work, the owners of Century City’s massive Century Plaza Towers pulled off the rare feat of fully leasing all 2.4 million square feet of office space.
The 45-year-old twin-tower development is in the midst of a multi-year renovation, and last fall secured a $1.2 billion refinancing package from Deutsche Bank, Wells Fargo and Morgan Stanley. JPMorgan Asset Management’s Strategic Property Fund and Hines Management Holdings are equal partners on the property.
CMBS loan documents provide an inside look at the rent roll, shortly before it achieved the 100-percent occupancy milestone in February.
The two towers were 92.9% leased as of October to 122 tenants, with 47 law firms accounting for more than 61 percent of the floor area and 64 percent of the rent roll. Three of the top five tenants — law firms Manatt Phelps, Kirkland & Ellis and Greenberg Glusker — were new signings and were set to take occupancy of their spaces earlier this year. The largest tenant, Bank of America, was also set to take up an additional 65,000 square feet at the start of 2020. That would bring its total square footage to 150,000.
Other recent lease deals at the complex included JLL with a 28,000-square-foot renewal, and lender Bank OZK with a new 3,100-square-foot lease. Both tenants are paying over $70 per square foot, above average for the property as a whole.
A large piece of the latest refinancing was included in a single-asset CMBS deal known as CPTS 2019-CPT, while smaller loan pieces were included in six other CMBS conduit transactions last year.
The in-place rents of $59 per square foot at Century Plaza Towers are about 11 percent below the appraiser’s concluded market rents of $66 a foot, Kroll notes — which it considers a credit positive given the potential for rent increases as leases roll over.
Over the next decade, an average of 160,000 square feet in leases at the property, or 7 percent of total space, is set to expire each year. Over the past 24 years, the average occupancy at the complex has been 91.3 percent.