CBREGI Sells CBRE DTLA HQ for $330M

LOS ANGELES—CBRE Global Investors has sold 400 S. Hope Street in Downtown Los Angeles to a joint venture between PNC Financial Services and GLL RE Partners. The terms of the transaction were not disclosed, however, industry sources unrelated to the deal tell GlobeSt.com that the property traded hands for $330 million and that the investor purchased the property in 2012 for $235 million, creating nearly $100 million in value. The 700,000-square-foot office building houses CBRE's global headquarters, where the firm debuted its workplace 360 office model.

“We were done with our business plan,” Phil Hench, a principal at CBRE Global Investors, tells GlobeSt.com about why they decided to dispose of the asset. “We are a value-oriented fund, so our MO is to create value through leasing and physical repositioning, and we typically try to achieve a business plan in fairly short order, less than five years. We had completed that as this building; we had bought the property at less than 80% occupancy and taken it to more than 90%, and we took it from a second-tier class-A property to a true Downtown class-A property that we bought with all of the various amenities that we brought in and the lease extensions.”

The investor drove leasing at the building through a combination of new leases and lease extensions. The largest new tenant to the building was CBRE, which occupies the top two floors. Although they were an important part of the value creation, CBRE did not agree to occupy the space until after CBREGI purchased the asset. “There were discussions underway when we bought the property for CBRE to occupy it, but those had not been finalized,” says Hench. “We proceeded with the investment with or without CBRE's commitment to occupy space. That really came about after we made the decision.” The other new leases signed were by financial services groups, and all were less than a full floor.

The stabilized asset attracted a lot of interest from investors around the world. “The asset was ideal for a core buyer that wanted more of a low-risk profile,” adds Hench. “We had a lot of interest from different types of buyers, including offshore capital, which really wasn't a surprise given the offshore capital that has come to the Downtown Los Angeles market. Ultimately, the group that we sold it to was the most serious about buying the property, and that is how we ultimately came to terms with them.” Hench declined to give specifics about the marketing process or the number of buyers; however, he did reveal that there were multiple offers.

CBRE's Todd Doney, John Zanetos and Michael Longo represented CBRE in the transaction, along with Kevin Shannon, Ken White, Michael Moll and Rob Hannan of Newmark Grubb Knight Frank. Val Achtemeier and Brad Zampa of CBRE debt and structured finance/capital markets arranged the financing on behalf of the buyer. The debt team secured a seven-year $157 million loan through Wells Fargo.

LOS ANGELES—CBRE Global Investors has sold 400 S. Hope Street in Downtown Los Angeles to a joint venture between PNC Financial Services and GLL RE Partners. The terms of the transaction were not disclosed, however, industry sources unrelated to the deal tell GlobeSt.com that the property traded hands for $330 million and that the investor purchased the property in 2012 for $235 million, creating nearly $100 million in value. The 700,000-square-foot office building houses CBRE's global headquarters, where the firm debuted its workplace 360 office model.

“We were done with our business plan,” Phil Hench, a principal at CBRE Global Investors, tells GlobeSt.com about why they decided to dispose of the asset. “We are a value-oriented fund, so our MO is to create value through leasing and physical repositioning, and we typically try to achieve a business plan in fairly short order, less than five years. We had completed that as this building; we had bought the property at less than 80% occupancy and taken it to more than 90%, and we took it from a second-tier class-A property to a true Downtown class-A property that we bought with all of the various amenities that we brought in and the lease extensions.”

The investor drove leasing at the building through a combination of new leases and lease extensions. The largest new tenant to the building was CBRE, which occupies the top two floors. Although they were an important part of the value creation, CBRE did not agree to occupy the space until after CBREGI purchased the asset. “There were discussions underway when we bought the property for CBRE to occupy it, but those had not been finalized,” says Hench. “We proceeded with the investment with or without CBRE's commitment to occupy space. That really came about after we made the decision.” The other new leases signed were by financial services groups, and all were less than a full floor.

The stabilized asset attracted a lot of interest from investors around the world. “The asset was ideal for a core buyer that wanted more of a low-risk profile,” adds Hench. “We had a lot of interest from different types of buyers, including offshore capital, which really wasn't a surprise given the offshore capital that has come to the Downtown Los Angeles market. Ultimately, the group that we sold it to was the most serious about buying the property, and that is how we ultimately came to terms with them.” Hench declined to give specifics about the marketing process or the number of buyers; however, he did reveal that there were multiple offers.

CBRE's Todd Doney, John Zanetos and Michael Longo represented CBRE in the transaction, along with Kevin Shannon, Ken White, Michael Moll and Rob Hannan of Newmark Grubb Knight Frank. Val Achtemeier and Brad Zampa of CBRE debt and structured finance/capital markets arranged the financing on behalf of the buyer. The debt team secured a seven-year $157 million loan through Wells Fargo.