Content provided in partnership with

Business Services Industry

Fla. fund buys prime piece of Beverly Hills

Los Angeles Business Journal, Dec 25, 1995 by Brad Berton

Executives with the Wilshire Rodeo Plaza's seller, an affiliate of Citicorp Real Estate Inc., and the buyer's investment adviser, Heitman Financial Ltd., declined to disclose the buyer or the price paid for the former West Coast headquarters of securities brokerage Drexel Burnham Lambert Inc.

But local real estate sources said the Florida Retirement System paid more than $81 million for the 260,000-square-foot property. Title records identify the new owner as a Florida limited partnership known as Wilroad Associates.

"We think this is an excellent long-term investment for our client," said Larry Krasner, the locally based Heitman executive vice president who helped negotiate the transaction on behalf of the buyer.

Most Popular Articles in Business: Research and Markets : Tesco Plc - SWOT Framework Analysis; Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors; eBay made easy: ready to start an eBay business? These 5 simple steps will ...; Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...; Wal-Mart's newest distribution center opened last month near the southwest ...; More »

"That location is 'ground zero'" in real estate terms, he said, adding that the Beverly Hills office and retail property markets are quickly recovering from the Southland's recession. Large blocks of quality office space are rare today in Beverly Hills - where restrictive zoning makes a property like Wilshire Rodeo Plaza "irreplaceable," Krasner noted.

Along with the burgeoning strength of the Beverly Hills marketplace, the transaction reflects the capital markets' renewed confidence in Westside commercial real estate - although, like most recent investment deals, the Wilshire Rodeo went for well below its peak late-1980s value.

In fact, Hong Kong investors headed by Polylinks International Ltd. are thought to be plunking down some $100 million for the swanky Regent Beverly Wilshire Hotel - directly across Rodeo from the three-building Wilshire Rodeo Plaza property.

In the wake of Drexel Burnham's well-publicized downfall and the previous property owners' bankruptcy filing, Wilshire Rodeo Plaza was just 25 percent leased when the Citicorp-led mortgage lender group took back the complex in the fall of 1993.

Leasing turnaround

Since then, Citicorp and its management and leasing agent, The Shorenstein Co., have brought occupancy up to well beyond the 90 percent mark. While the team was able to recruit key new office tenants, it has clearly transformed the complex's ground level - and even some space above - into a retail environment.

Prominent along the chic stretch of Wilshire today is Wilshire Rodeo Plaza's just-opened Planet Hollywood eatery and the soon-to-come Nike Town store. The former is on two levels, the latter three.

"Retail is the force that will continue to drive the (Beverly Hills) market into the future in terms of both property values and property use," commented Darrell Levonian, who heads the Westside-based Sands Commercial real estate brokerage. He cited the likes of Leslie's Swimming Pool Supplies and Kinko's Copies on Wilshire in Beverly Hills - newcomer tenants the ritzy boulevard wouldn't have seen in years past.

Site transformed

Citicorp Real Estate Vice President/Senior Asset Manager Geoffrey Sears acknowledged that the lender group invested "millions" into the property's transformation.

But the investments seem to have paid off. The price the Florida group reportedly paid amounts to about $310 per square foot - perhaps the most anyone has paid for a large commercial property here since the late 1980s.

The property actually has three addresses: adjacent converted department stores at 9536 and 9560 Wilshire and a late-vintage office building immediately south at 131 S. Rodeo. Partnerships headed by Westside-based developer Avi Lerner - and said to include Drexel Burnham "junk bond king" Michael Milken - owned the properties and leased them to the fallen securities firm.

When the partnerships deeded the properties over to Citicorp in compliance with their consolidated bankruptcy reorganization plan, the total unpaid mortgage principal and interest added up to about $94 million.

Other key new tenants at the complex now include Merrill Lynch & Co., Equity Marketing Inc., United Talent Agency and Pace Wildenstein Gallery.

Shorenstein will continue to manage and lease the complex. Heitman will have overall asset management responsibilities.

Business Services Industry

Fla. fund buys prime piece of Beverly Hills

Los Angeles Business Journal, Dec 25, 1995 by Brad Berton

Find Research Guides for:

Find Featured Titles for: Autos

Most Popular Articles in Business

Most Popular Publications in Business