KB Home and billionaire Philip Anschutz have agreed to take over development and ownership of a planned $600-million hotel and condominium project across from Staples Center, officials announced Thursday.
The partnership all but ensures completion of what is seen as the linchpin in downtown Los Angeles' transformation into a viable entertainment and residential district. The project's proximity to the Los Angeles Convention Center also could spark a rebound in the city's convention and tourism business, which has suffered because of a dearth of hotel rooms and attractions compared with Las Vegas and Anaheim.
The project, however, attracted controversy because nearly half its cost -- $290 million -- will be financed by city subsidies and loans.
Anschutz's AEG Group and KB Home's newly formed KB Urban division replace developers Apollo Real Estate Advisors and Wolff Urban Management Inc., who were bought out of the project.
"Our decision not to continue with the creation of this hotel will allow the project's development to go on in the most expeditious manner," said Richard Ackerman, an Apollo principal.
The 50-story structure will include two separate hotels with a combined 1,100 rooms, plus 250 luxury condo residences. It will be part of a $2.5-billion "sports-entertainment" hub, called L.A. Live, already under construction by Anschutz's AEG Group that also will feature restaurants, nightclubs and movie and performance theaters in addition to Staples Center.
The area also features new or proposed high-rise office and condo towers, as well as retail establishments. Demand for space seems healthy, as rents for downtown housing and commercial space have risen faster than in many other parts of the city in recent months.
"We will have a massive impact on the rest of the downtown hotels as we become one of the great points of destinations for conventions and events," said Tim Lieweke, president and chief executive of Los Angeles-based AEG.
At 50 stories, the new structure also would become one of the tallest buildings downtown. The tallest, at 73 stories, is the US Bank Tower, formerly called the Library Tower.
Lieweke said Anschutz, a longtime Denver resident who made his fortune in oil and gas, railroads, telecommunications and real estate, put up $100 million in capital to ensure that the hotel project got built.
"We have to get this built so we can get the convention business turned around," Lieweke said, adding that AEG has no plans for other hotel projects.
