LOS ANGELES—Rising Realty Partners has recapitalized the historic PacMutual Building with Lionstone Investments as its new equity partner. Lionstone has replaced former equity partner Mount Kellett Capital Management for an undisclosed price. RRP will remain the operating and managing partner of the asset.
“I think from Mount Kellett’s perspective, it was time to take their chips off the table and move on. They had done what they wanted to do and gotten the return they wanted to get,” Christopher Rising, RRP president and COO, tells GlobeSt.com. RRP purchased the asset in 2012 with Mount Kellett when it was only 50% leased. Through a $25 million renovation project, they have brought the asset up to 90% occupancy and recently achieved LEED-Platinum certification, becoming the oldest building in Los Angeles to hold the esteemed green title. “When we bought the project, there wasn’t a whole lot of conservative capital that was interested in doing this deal,” Rising adds. “Realty equity is priced based on risk, and we found a wonderful partner in Mount Kellett. They believed in our vision and believed we could execute it.”
Lionstone Investments approached Mount Kellett about taking over the company’s stake in the asset. “We were looking for capital that was much more long term because we still believe there is a lot we can do with this project,” says Rising. “We believe we can continue to improve it and make it a marquee asset in Downtown Los Angeles.” The price of the offer is not disclosed, but Rising assures that it was a fair market rate. “Mount Kellett decided it was a good price for them, and we decided it was a good price for us to stay in the deal. Mount Kellett and ourselves wouldn’t have done it if we didn’t believe this was a very good, full-market price. At the same time, we have invested our own money again, so it was also a very fair price.”
The renovations of the building are far from finished. Rising says they are continuing to renovate the building’s office units as leases roll. Currently, they have renovated about 30% of the spaces. This summer, RRP will unveil the LiveWall, an 80-foot planted green wall, and a pocket park for tenants to enjoy. The new amenities have brought 56 new tenants into the 460,000-square-foot building.