IN-DEPTH: CIM pays $296m for L.A. property
CIM Group has paid $295.7 million for Two California Plaza in downtown Los Angeles. Here’s an in-depth look at the deal.
THE DEAL
The 54-story property at 350 South Grand Ave. was sold by CWCapital Asset Management. The 1.3 million-square-foot office tower served as collateral for a $468 million loan that had been securitized through GS Mortgage Securities Corp. II, 2007-GG10.
THE ASSET
The property was part of a seven-property portfolio CIM acquired in February. Two California Plaza, the marquee asset in the seven-asset portfolio acquisition, is located in the downtown submarket of Bunker Hill with approximately 1.28 million net rentable square feet of office space and 44,000 square feet of retail space.
The building, which recently received LEED Platinum certification, is part of a two-tower office complex that shares a retail and restaurant pavilion including a 1.5-acre water court and performance plaza. Two California Plaza is also near popular destinations such as the Walt Disney Concert Hall, the Cathedral of Our Lady of the Angels, the Museum of Contemporary Art and the Los Angeles Central Library. The asset is in close proximity to significant developments that are transforming downtown Los Angeles including new cultural, residential, entertainment and transportation infrastructure projects.
Completed in 1992 by Hathaway Dinwiddie Construction Co., Two California Plaza is one of twin towers designed by Arthur Erickson Architects and named BOMA Building of the Year in 1997 and 2001. California Plaza was a 10-year, $1.2 billion project.
The financial terms of the portfolio acquisition were not disclosed. The portfolio’s other assets are Montclair Plaza, a two-story enclosed regional shopping mall in Montclair, Calif.; Stadium Towers Plaza, a 12-story, class A office tower in Orange County, Calif.; Montvale Center, an approximately 125,000-square-foot office building in Gaithersburg, Md.; Comfort Suites – San Diego/Mission Valley, a 126-room hotel in San Diego; DoubleTree by Hilton Hotel – Bakersfield, a 262-room hotel in Bakersfield, Calif.; and a nonperforming loan secured by 270 Technology Park, an approximately 440,000-square-foot office campus in Frederick, Md.
The CIM portfolio was part of the 134 assets with an unpaid principal balance of $3.43 billion CWCapital Asset Management marketed since October 2013. The assets consist of predominantly real estate and nonperforming commercial mortgage loans spread across the United States. So far, 110 of 122 asset sales have closed; the remaining 12 assets are expected to close later this month.
THE MARKET
The Los Angeles office sector has attracted many investors, according to data by Real Capital Analytics. During 2013 approximately 255 transactions were completed totaling $9.63 billion. So far this year, approximately 78 transactions have been completed, totaling $2.0 billion, compared to the previous quarter when approximately 77 transactions closed for a total of $3 billion.
The top buyers in the past two years are Brookfield Asset Management, which acquired 10 properties for $2.1 billion; the California Public Employees’ Retirement System, which purchased six properties for $997 million; and The Blackstone Group, which paid $918 million for 45 properties.
THE PLAYERS
CIM Group is a real estate and infrastructure investment firm that since 1994 has invested in dynamic and densely populated communities throughout North America.
CW Financial Services is a commercial real estate services platform offering a full range of products and services including special servicing, investment sales, investment management, property management, research and consulting, insurance and risk management and technology solutions through its subsidiaries CWCapital Asset Management, CWCapital Investments, CompassRock Real Estate, ConvergentRisk Insurance Agency and CWFS Insight.
