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Blue Cross Putting Its Headquarters Up for Sale : Insurer Will Lease Back 12-Story Building from Purchaser, Co-Develop Warner Center Acreage

August 16, 1987|DAVID W. MYERS | David W. Myers is a Times real estate writer

Officials representing financially ailing Blue Cross of California will meet with commercial real estate brokers and investors next week to discuss the sale of their 12-story headquarters building in Woodland Hills' posh Warner Center.

The sale of the building--which has soared in value since Blue Cross finished construction in 1977--is expected to pump as much as $80 million into the 50-year-old insurer's dwindling coffers.

Janet Hartman, a Blue Cross spokeswoman, said none of the 2,586 people who work in the building would be affected by the sale because the company intends to lease the building back from the eventual buyer and continue to use the complex as its corporate headquarters.

"We do not intend to sell the building to any company that will not agree to let us lease back the space," Hartman said. The company expects to have the building sold by the end of the year.

Development of Land

About 29 acres surrounding the building that are also owned by Blue Cross will not be sold, but will likely be developed through one or more joint-venture partnerships the company hopes to enter.

Warner Center was little more than a series of artists' renderings when Blue Cross bought its parcel--bounded by Oxnard and Erwin streets and Canoga and Owensmouth avenues--about 12 years ago. The area has since become a bustling commercial hub, and property values have soared.

The sale will be handled by the Phoenix headquarters of Coopers & Lybrand, a national accounting and real-estate consulting firm.

Stanley Friedman, the Coopers & Lybrand executive in charge of marketing the property, said the building will likely sell for more than $60 million and could fetch as much as $80 million.

Interested Firms

However, one San Fernando Valley commercial real-estate broker said the eventual sales price would probably be closer to $60 million.

More than 40 firms interested in purchasing the building contacted Coopers & Lybrand last week, shortly after the plan to sell it leaked out, Friedman said.

He wouldn't identify the callers, but said at least two firms were scheduled to present formal offers for the building last Thursday.

Friedman said he'll meet with more potential buyers and brokers in Los Angeles Aug. 25 to discuss the planned sale.

Blue Cross reported a $31.3-million loss in the first three months of this year, the most recent figures available. Its cash reserves--another important indicator of an insurer's financial health--have been plunging for more than a year.

The company's financial position has been hurt by a variety of factors plaguing many health insurance firms, including intense competition from a growing number of low-cost health maintenance organizations, such as Kaiser Permanente and Maxicare Health Plans Inc.

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