Christmas miracle?
Victor Coleman’s real estate investment trust, where losses are ballooning, made two early December announcements: Jon Bortz became a board member, and the company sold a Los Angeles office campus to tenant Riot Games at a price that permits it to repay the commercial mortgage-backed securities debt connected to the real estate.
Bortz, chairman and chief executive of Pebblebrook Hotel Trust, replaced Jonathan Glaser on the board. Bortz founded the hotel REIT and added LaSalle Hotel Properties to Pebblebrook’s holdings after a spirited bidding war with Blackstone back in pre-pandemic days.
Bortz saw total compensation of $7.4 million last year compared to Coleman’s take of about $25 million. He’ll close the gap just a bit with his new gig, getting a $40,000 annual cash retainer, plus $20,000 as an audit and compensation committees member.
Now for the Olympic Boulevard deal … Hudson Pacific sold a 248,000 square foot, five-building office campus at 12333 West Olympic Boulevard for $150 million and got an extra $81 million payment for the termination of Riot Games’ existing lease. The video-game developer picked up transfer taxes, which came to more than $8 million under the City of L.A.’s Measure ULA rate of 5.5 percent for commercial deals over $10.6 million.
The total take, in any case, came to $231 million, giving Hudson Pacific cushion on the $206 million debt it was carrying. The firm increased its funds from operations outlook for the fourth quarter to a range of $0.15 to $0.25 per diluted share compared to $0.01 to $0.05, partly on the news.
The deal at $150 million comes out to about $605 per square foot, but with the bonus payment on the lease cancellation it comes out to $931 per square foot. That’s more than Kilroy Realty recently dropped on Maple Plaza, the Beverly Hills office campus that at a $205 million purchase price came out to around $700 per square foot. Even at $605 a square foot, it’s more than the second priciest office deal in all of West Los Angeles during the third quarter per CBRE: Kilroy’s $40 million sale of a Santa Monica property, which was around $500 per square foot.
BofA Plaza makes 3 for Brookfield distress
In Brookfield land, Colliers is shopping the defaulted commercial mortgage-backed securities loan connected to Bank of America Plaza, which the landlord once owned but lost to a receiver. The brokerage anticipates substantially discounted bids to the $400 million debt balance.
The 1.4 million square foot, 57-story downtown Los Angeles tower at 333 South Hope Street is worth $212.5 million, or about $150 per square foot, based on recent assessments. That compares with $605 million value a decade ago. The latest distressed debt offering is one of three currently tied to Brookfield in DTLA these days, with the paper on the EY Plaza and the Wells Fargo Center — North Tower also on the block.
Family ties
Remember the five brothers who emigrated from India, amassed a fortune in diamonds and Los Angeles real estate, then embroiled in a two-decade legal brouhaha that ended in a $10 billion verdict?
Old habits die hard.
Two Jogani brothers, Rajesh and Chetan, are suing their niece and nephew for $775 million. The two allege the younger relatives were paid hundreds of millions in fraudulent fees, salaries and bonuses by their father, another Jogani brother, Haresh.
Last year, Haresh was ordered to pay Rajesh and Chetan, and their other brothers, to settle a dispute over their sprawling San Fernando Valley real estate portfolio. Now Rajesh and Chetan claim their brother made payments to his children, their niece and nephew to siphon off and hide assets from the real estate businesses.
The juicy complaint throws out accusations of “looted” money, “unfettered control,” “personal piggy bank” and “malicious” conduct. Will it become another decades-long legal brawl?
Newsom in New York
California’s ambitiously charismatic Governor Gavin Newsom — in a typical blue suit and open-collared crisp white shirt — appeared to have his next campaign in mind when he appeared at the New York Times’ DealBook Summit. But he barely touched on the most pressing problem of his current job: An intertwining homeless and housing crisis in the Golden State.
Newsom took a page from President Donald Trump’s handbook, claiming his critics have “California derangement syndrome.”
“We’ve never tackled our housing crisis more aggressively than we tackled it last year,” he later said.
Alas, there were no follow-up questions to Newsom on the results of his efforts.
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Los Angeles
New twist to Joganis’ billion-dollar real estate feud
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Brookfield-owned Bank of America Plaza debt for sale after $400M default