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Firm Squeezes Profits from a 'Lemon'

January 31, 1988

NuWest, a Los Angeles-based investment and development firm, says it's squeezing some sweet profits out of a local office complex that some people called a "lemon" only a few months ago.

The story begins in 1983, when two developers formed a joint venture with Los Angeles-based Westwood Savings & Loan to build a 13-story office complex at 12300 Wilshire Blvd.

Located at the southwest corner of Wilshire Boulevard and Wellesley Avenue in trendy Brentwood, the granite-sheathed complex--designed by the Nadel Partnership, seemed destined for success.

But problems plagued the project from the start. The area was "down zoned" in 1984 to allow only four levels.

Construction began despite the setback, and the shell of the structure was completed early in 1986.

By this time, a large law firm that planned to take space in the building had joined the two developers and Westwood Savings & Loan in the joint venture.

Then, in March of 1986, Westwood Savings & Loan was declared insolvent by federal regulators. The Federal Savings & Loan Insurance Corp. assumed control of the troubled lender, and work on the office complex stopped.

Soon after, Richard Alter, NuWest's chief financial officer, learned of the troubled project. Although Alter felt the building had good potential, it also carried a great deal of risk: Lawsuits, government involvement and partnership problems had created a Gordian knot that no one seemed willing to unravel.

Alter decided to take a chance, and in December, 1986, made an all-cash offer of about $9 million. He said he and other NuWest officials spent months negotiating with FSLIC officials to solve the legal problems, and last July, the offer was accepted.

NuWest beefed up its marketing campaign. The building is now 75% leased.

According to one NuWest official, everyone involved in the deal won. The savings and loan was paid back the original loan, the law firm tenant was paid and the developers actually made a small profit.

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