LOS ANGELES-Two and a half years after buying the 626,000-sf Union Bank Plaza building for $140 million, Hines has enlisted Jones Lang LaSalle to sell the 40-story high rise Downtown. Michael Zietsman and David Doupé of Jones Lang LaSalle are handling the sale on behalf of Hines, which acquired the class A office property in 2005 via its US Office Value Added Fund.

Zietsman tells GlobeSt.com that the property has already generated very strong interest from prospective buyers, including quite a few overseas investors. Close to 50 groups have already returned the confidentiality agreement asking for more information about the property, he notes.

Zietsman describes the Union Bank Plaza, which is at 445 S. Figueroa St., as a “core to core-plus” opportunity for prospective buyers. He explains that in addition to upside from raising rents when leases roll over, the property offers the potential for development of approximately 300,000 sf of additional space that could be office, residential or a hotel.<p.The Union Bank property is 99% leased, and JLL estimates that roughly 25% to 28% of the space in the building is being leased at below-market rents at a time when rents are rising steadily Downtown. Hines has added value to the property during its ownership tenure by increasing occupancy to 99% from the 95% occupancy when it acquired the building.

Zietsman, who brokered the sale of the building when Hines bought it in March 2005, notes that net rents at the property have doubled since Hines acquired it. Regarding the property’s development potential, Zietsman explains that when Union Bank Plaza was built it did not build all of the space that was allowable under the floor-to-area ratio that was then in effect.

The Los Angeles Community Redevelopment Agency has proposed that the floor-to-area ratio be increased to 6:1 from its current 5:1 level. That proposal is expected to go before the city council by the end of the year.

Besides its prospective development potential, the Union Bank Plaza also represents an unusual opportunity to buy a building that is not controlled by one of the major Downtown landlords. Zietsman points out that there is such a strong concentration of ownership Downtown, with several landlords controlling large portions of the class A office space, that few such assets come on the market.

Situated adjacent to the Harbor Freeway 10 in the heart of the Financial District, the Union Bank property occupies a full city block. It features a street-level retail center, a 1,250-sf conference facility and a four-level parking garage that can accommodate more than 900 vehicles.

The building serves as the regional headquarters for Union Bank of California, which occupies 51% of the space. The 20th floor is also the new West Coast office for the law firm Mendes & Mount LLP. Designed by Albert C. Martin and completed in 1967, Union Bank Plaza was extensively renovated in 1994 under the management of Johnson Fain and Pereira.

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