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Warner Center Corporate Park Sold for $51.5 Million

Real estate: The deal is seen as a sign of resurgence in Southern California commercial property sales.

August 28, 1996|JILL LEOVY | SPECIAL TO THE TIMES

WOODLAND HILLS — In a transaction seen as breathing new life into the moribund commercial real estate business, Warner Center Corporate Park, a 343,458-square-foot office complex, has been sold for $51.5 million to CarrAmerica Realty Corp., a Washington, D.C. real estate investment trust.

The sale also represents the end of an era for Robert Voit, the 56-year-old developer who transformed the face of the west San Fernando Valley by building a large chunk of the gleaming high-rise district known as Warner Center.

With this sale, Voit has now sold the last of his office holdings in Woodland Hills.

He said he is cashing out in order to diversify his real estate holdings in other markets, including Orange County, Arizona and Northern California.

Warner Center Corporate Park is a cluster of mostly low-rise office buildings on the northwest corner of De Soto Avenue and Burbank Boulevard. Its sale, which came as a surprise to many in the local real estate community, was not closed without some sentiment. "It's 20 years of my life," Voit said.

Many observers called the sale another sign that the long-troubled commercial Southern California commercial real estate market is at a turning point.

"It's a signal that the worst is over," said Jack Kyser, head of the L.A. County Economic Development Corp.

The transaction is drawing attention not just because of the size of the 24-acre campus--which recently became home to a branch of the U.S. Bankruptcy Court--but because of the terms of the deal, which observers viewed as highly favorable to Voit.

The price CarrAmerica paid works out to about $150 per square foot. That's "a high-water mark," according to John Nagle, a senior investment officer in Southern California for John Hancock Real Investment Group.

"I thought the price was high," agreed Tom Festa, a commercial real estate broker for Grubb & Ellis in Sherman Oaks. "And I think it's a very positive sign for the market that someone would offer Bob a price he would accept."

Warner Center Corporate Park was not a distressed property, said Voit. Built in 1980, the complex has lost value since the market's peak, but rents there have long been sufficient to cover service of all debts, he said. He declined to give the amount invested to build the complex.

The property was never formally put up for sale, according to Voit. He said CarrAmerica came to him with an offer--a scenario that would have been all but unheard of in commercial real estate a couple of years ago.

Voit agreed the sale meant that "big institutional money is returning to Los Angeles." Real estate brokers throughout the Valley have been reporting increased sales of office buildings in recent months. But until now, most of the buyers have been prospective tenants, not East Coast investors such as CarrAmerica, brokers say.

CarrAmerica bought the property expecting a rate of return that was lower than most investors have been willing to accept in the Valley to date--a sign of increased confidence in the market, said Bill Palmer, senior vice president of CB Commercial in Sacramento, who brokered the deal.

The terms "definitely met [Voit's] expectations," Palmer said.

CarrAmerica is a rapidly expanding investment trust that owned about 8.4 million square feet of offices nationally as of June, according to documents the company filed with the Securities Exchange Commission.

The company began an aggressive expansion about six months ago, snapping up so-called "value" office buildings in rock-bottom markets. Southern California is one of CarrAmerica's target areas because commercial real estate here is rounding a corner, said spokeswoman Karen Widmayer.

CarrAmerica is not the only investment company suddenly taking a second look at Los Angeles' hard-hit commercial real estate market.

Other big East Coast investors are also suddenly edging up. Giant Bankers Trust of New York, for example, has accumulated large portfolios of troubled Southern California real estate assets.

In a recent interview, Robert Blumenthal, managing director of Bankers Trust real estate/finance business, said the bank is working to help finance "a number of public real estate companies" who are hot to expand in the Southern California market.

"There is now more money chasing deals than there are good deals," said Nagle of John Hancock.

Voit retains a stake in a few scattered retail properties in Warner Center, and one of his companies still manages the 3 million square feet of Warner Center office space he built and owned with partners beginning in the 1970s. A.H. Warner Center LLC, a group of pension funds, acquired about 2.3 million square feet there more than a year ago, Voit said.

Voit plans to keep his corporate headquarters in the area. He is working on developing business parks and shopping centers in Arizona and Northern California.

He is also in a partnership to build a mixed-use industrial and retail complex on the site of the former General Motors plant in Panorama City.

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