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Commercial Real Estate

Group Completes Purchase of Water Garden II Complex

April 03, 2001|BRAD BERTON | SPECIAL TO THE TIMES

An investment fund managed by J.P. Morgan Chase & Co. has completed its acquisition of the recently opened Water Garden II office complex in eastern Santa Monica from a development team that includes locals J.H. Snyder Co., TransAction Financial and Colony Capital.

J.H. Snyder partner Michael Wise confirmed that escrow closed on the luxurious, 600,000-square-foot complex Friday. He declined to specify the price paid by J.P. Morgan Chase, which also owns the Water Garden's adjacent first phase.

But Westside real estate investment specialists confirmed privately that the Morgan Chase group paid about $240 million for a project reportedly costing close to $150 million to build. The sale is a show of confidence in the area given the amount of Westside office space that failing and shrinking dot-com tenants have dumped on the market in recent months.

More than one-third of the Water Garden's 1.2-million square feet of space is available for lease or sublease as tenants such as Sapient Corp. and MarchFirst Inc. had leased substantially more space than they needed, said Vincent E. Pellerito, a vice president in Cushman Realty Corp.'s West Los Angeles office. However, as he and others observed, longer-term prospects for quality Westside office properties are excellent, given the difficulty and cost of developing additional projects.

Eastdil Realty brokered the Water Garden sale on the developers' behalf. Trammell Crow Co., which has been managing and leasing Water Garden's first phase for years, assumed those functions at the second phase as well.

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