Hardly a week after an affiliate of a Hong Kong real estate giant acquired one of Beverly Hills' tallest office towers, the owner of the city's second-largest (in floor space) commercial property is about to select a buyer.
Brisk investment activity driven by the rapidly recovering Westside office market has motivated the Matterhorn One closed-end investment fund to sell the 9100 Wilshire Boulevard complex less than two years after purchasing the twin 10-story towers, said K. Robert "Bobby" Turner, a managing partner with Canyon Partners Inc. Turner said he expects the final bids to be close to $70 million.
While Turner wouldn't disclose what the Canyon-managed Matterhorn fund paid for the property, county property records show an assessed value of $34.15 million for 1997 property tax purposes. Beverly Hills-based Canyon is the money management and investment advisory firm that manages the Matterhorn investment fund, which purchased 9100 Wilshire early last year through a $1.1-billion nationwide real estate equity and debt portfolio acquisition from General Electric Capital Corp. The Canyon fund family also includes the Value Realization Funds.
Turner said Canyon is an "event-driven" group headed by four former executives of the Drexel Burnham Lambert Inc. securities firm: Turner, R. Christian B. Evensen, Joshua S. Friedman and Mitchell R. Julls. And the event driving the decision to sell the 324,000-square-foot 9100 Wilshire property is the abundance of capital--particularly from growing real estate investment trusts--now chasing well-positioned Westside office properties.
While Turner declined to identify the five finalist suitors expected to make revised offers for the property by Friday, he did acknowledge that publicly traded REITs are well-represented in the handful of bidders pared down from the initial 14. First Property Realty Corp., 9100 Wilshire's leasing agent, is handling the sale expected to close in January.
Other Westside real estate sources said privately that two of the L.A. area's most active office property buyers--Arden Realty Inc. and Douglas Emmett Realty Advisors--are among the finalists.
Arden, which became a REIT in connection with its initial public stock offering in October 1996, would appear to rank among the 9100 complex's most likely buyers. The property fits the company's investment profile--its age (27 years) ranks it in the "sub-Class-A" category, and its 18% vacancy rate suggests a substantial value-enhancement opportunity as Westside offices continue to fill up.
On top of that, Arden is headquartered in the 9100 building at the southwest corner of Wilshire and Doheney Drive. Arden also owns Beverly Hills' biggest office property--the 406,000-square-foot Wilshire-San Vicente Plaza--as well as the 10-story building at 9665 Wilshire housing Canyon's headquarters. Arden declined comment on the bidding.
The Douglas Emmett group, based in Brentwood, is a privately held advisory firm that acquires and manages prime Los Angeles area commercial real estate on behalf of its roster of institutional investors.
It has purchased several high-profile Westside office buildings over the last three years--most recently Brentwood's 17-story Wilshire Landmark II tower about two weeks ago for a reported $125 million to $130 million. Douglas Emmett executives didn't respond to phone calls.
Other bigger tenants in the 9100 complex--originally developed by Konheim Enterprises and designed by the Maxwell Starkman architectural firm--include Bosley Medical Group, basketball star Magic Johnson's business operations, the law firm Freshman Marantz Orlanski Cooper & Klein and the accounting firm of Schneider Goldberg & Rohatiner.
On a per-square-foot basis, the 1970-vintage, concrete-frame 9100 Wilshire won't fetch quite the pricing level seen at some of the Westside's newer steel-frame towers, said broker Stan Gerlach, a senior vice president in CB Commercial Real Estate Group's Westside office.
Just last week, the U.S. real estate investment operation of Hong Kong's wealthy K.S. Lo family acquired the 102,319-square-foot 9701 Wilshire tower--among Beverly Hills' tallest at 12 stories--for $27 million.