A San Diego-based investor is expected today to close its purchase of a $265-million real estate portfolio in California and Texas that includes the 24-story 801 Figueroa Tower in downtown Los Angeles and the Pasadena Hilton.
A partnership of Pacific Realty Trust (an affiliate of Shidler Group) and New York investment bank Angelo Gordon & Co. are acquiring the properties from Indonesia's second-largest conglomerate, Sinar Mas, which is raising money to pay down debts incurred in the financial crisis abroad.
Analysts said the six properties are a bargain. Because the Indonesian conglomerate was eager to sell quickly, Pacific didn't have to bid against other real estate investment trusts and funds; it merely put down a hefty cash deposit.
Officials with Octagon Group, a representative of Sinar Mas, declined to comment on the sale.
"It was a very good deal," said Jim Reynolds, a Pacific Realty partner. "If they had more time, they could have marketed it and gotten quite a bit more."
Sinar Mas will, however, make its money back on 801 Figueroa, the distinctive pink granite and blue glass building it scooped up for just $61 million in 1996. That building, now 90% occupied with such high-profile tenants as law firm Graham & James and international marketing firm Takenaka & Co., was valued at $80 million in this deal, sources say.
The entire Sinar Mas portfolio consists of five office buildings containing 2 million square feet and two hotels of 475 rooms. In addition to 801 Figueroa and the Pasadena Hilton hotel and office complex, it includes the 184-room Melrose Hotel in Dallas; Fannin Exxon Tower in downtown Houston; the Atrium at Collins Ridge in Plano, Texas; and the 450,000-square-foot Twin Towers office buildings in Dallas.
The Pasadena Hilton and its adjoining office tower will receive a $3-million face lift. Renovations of the 184-room Melrose Hotel in Dallas will follow.
"These buildings have not been supported by ownership resources for several years," Shidler principal Marc Brutten said. Renovations are necessary to make them competitive again in their markets, he said.
Pacific Realty was formed by Brutten and Reynolds two years ago to acquire office and industrial portfolios throughout the Southwest. This deal brings their holdings in California and Texas to a total of 8.7 million square feet.
Reynolds said the group is on track to acquire $500 million in real estate by the end of the year. In recent weeks, it shelled out $17.2 million for another Pasadena property, 127,000-square-foot 1111 Arroyo Parkway, a nearly full building in the financial district.
Pacific officials say they plan to package and sell some of their holdings--most likely the Texas office buildings and hotel--later this year. The partnership will hold on to its California buildings until the market here is peaking, Reynolds said, perhaps in two or three years.