Downtown Los Angeles' historic Fine Arts Building at 811 W. 7th St. has been sold to a partnership of Barker Pacific Group of San Francisco and New York-based Paxton Properties Inc.
The 12-story Romanesque-style building, built in 1927, was sold by Seventh Street Associates, a partnership headed by developer Bowers Perez Associates of Orange County. The partnership could no longer meet payments on its mortgage.
Perez completed a massive renovation of the 106,000-square-foot property in the mid-1980s, adding a new lobby, electrical and plumbing systems, elevators and restrooms. But the redevelopment price tag put the mortgage value well above what the building is currently worth, said Richard Johnson, chief financial officer of Barker Pacific.
Barker Pacific snapped up the property's note from Teachers Insurance & Annuity Assn. of New York for $8.6 million, after paying Bowers Perez a nominal fee. The building, which sits on a block east of the Omni Hotel, is now 92% occupied.
"We're getting an attractive return on our investment and we can continue to roll leases at higher rents as the market improves," Johnson said
Barker Pacific is a privately held company that specializes in turning around troubled properties. It was founded by Michael Barker, a former partner of Texas developer Gerald Hines. The company owns property in Texas, California and Florida and was selected as a general partner for the deal by Paxton, which has purchased property notes from Teachers on many occasions, Johnson said.
Originally designed by the architectural firm Walker & Eisen to resemble a medieval church, the Fine Arts Building first served as commercial studio space for artists and craftsmen. It was declared a cultural historic monument in 1994. The largest tenant now is architectural firm AC Martin Partners.