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Commercial Real Estate

Arden Realty's Buying Appetite Remains Strong

January 07, 1998|BRAD BERTON | SPECIAL TO THE TIMES

Real estate investment trust Arden Realty Inc. continues to gobble up Southland office buildings with the recently closed acquisition of a high-profile Westside tower--its biggest single acquisition to date--and the pending purchase of its headquarters building in Beverly Hills.

And Arden is also expected to announce this week that it will expand its ever-burgeoning portfolio by nearly half--bringing the total to about 16 million square feet--with a $600-million-plus deal to buy the "LBA Properties" portfolio. A successful purchase of that 5.2-million-square-foot portfolio would make Arden one of Southern California's largest commercial real estate owners and substantially expand its foothold in the Orange and San Diego county marketplaces.

The acquisitions are among the latest aggressive investments into the region's commercial properties--on the fast-improving Westside in particular--by Wall Street-backed REITs and other investors. Arden, which has traditionally focused on second-tier properties that may gain value through improvements, continues to play a leading role in the acquisition wars.

The New York Stock Exchange-traded company headed by veteran local real estate investment figures Richard Ziman and Victor Coleman declined to discuss its most recent activities. Sources close to the company noted that Arden has typically closed several transactions before making a formal public announcement.

But information gathered from public records and knowledgeable real estate sources indicates Arden has been particularly busy in recent weeks.

In late December, Arden acquired four noteworthy Los Angeles-area office properties. Most notable is a 75% interest in Brentwood's 25-story World Savings Center for $83.2 million. According to Securities and Exchange Commission documents, the deal also includes an option on the remaining 25%, bringing the total to more than $110 million--the company's biggest single acquisition to date.

Sources said the REIT is even considering relocating its corporate headquarters operation to the landmark 470,000-square-foot high-rise at Wilshire and San Vicente boulevards. Arden purchased World Savings Center from a partnership including affiliates of developers Realtech and Forest City Enterprises and investor Apollo Advisors. The building is about 15% vacant, a figure that would fall to about 11% if Arden makes the move west.

At the same time, Arden acquired the six-story Wilshire Pacific Plaza in Brentwood and the seven-story Glendale Corporate Center from Mutual Life Insurance Co. of New York for a total of $30.8 million. Arden also picked up the 302,500-square-foot City Centre complex in Fountain Valley for $33.3 million from Pacific Mutual Life Insurance Co.

Arden is also under contract to acquire the twin 10-story-towers Beverly Hills office complex now housing its headquarters, according to sources familiar with the deal. Arden is expected to pay the Matterhorn One closed-end investment fund, managed by Beverly Hills-based Canyon Partners Inc., a price in the "mid- to low- $60-million range" for the 324,000-square-foot 9100 Wilshire complex, a source noted.

Citing confidentiality agreements, K. Robert Turner, a managing partner with Canyon Partners, would only confirm that the Matterhorn fund is under contract to sell 9100 Wilshire--currently about 82% leased--to a REIT.

Arden has also reportedly been negotiating to acquire the 240,000-square-foot Continental Grand Plaza office building at 300 Continental Blvd. in El Segundo. Arden would buy that well-leased property from an affiliate of Highridge Partners, a diversified real estate investment firm which maintains its headquarters at Continental Grand.

But perhaps Arden's most ambitious deal to date--expected to be approved by its board and announced as early as today--is the big LBA Properties portfolio.

Arden's portfolio now stands at more than 11 million square feet, primarily characterized by well-located "Class B" properties in better suburban Southland markets.

Arden shares closed at $30.25, up 31 cents, Tuesday on the New York Stock Exchange.

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