Hines Acquires Citigroup Center for $280M

LOS ANGELES-Houston-based Hines has acquired the 891,000-sf Citigroup Center in Downtown Los Angeles from New York City-based Broadway Partners, according to a Hines statement Thursday. Terms of the sale were not disclosed, but sources peg the deal at $280 million.

The property is a 48-story class A office tower at 444 S. Flower St. in the Bunker Hill/financial district. Hines, which plans to lease and manage the property, acquired the asset via its Hines US Office Value Added Fund II LP.

Citigroup Center is about 95% occupied, according to a Jones Lang LaSalle team that has been handling the leasing of the building for Broadway Partners. The building, which occupies a two-acre site on the corner of Flower and Fifth streets, was completed in 1981 and was designed by AC Martin & Associates.

Hines sees “a significant upside” in the building, comments Dave Congdon, Hines senior vice president and HVAF II fund manager. He says that Hines was attracted to Los Angeles’ “economic strength and diversity, as well as the noteworthy investments in cultural, transportation and residential sectors that have sparked a renaissance in Downtown LA” Colin Shepherd, senior vice president with Hines in Los Angeles, notes that the company has had a “more than 20-year involvement in Downtown Los Angeles.”

For Broadway Partners, the sale represents a step in an asset disposition program initiated earlier this year, according to founder and CEO Scott Lawlor. The New York City-based investment and management firm maintains regional offices in Los Angeles and Chicago.

The sale of the Citigroup Center follows recent news that two new tenants and an existing tenant have signed leases that bring the occupancy to 95% at the office tower, according to the Jones Lang LaSalle team that executed the leases on behalf of Broadway Partners. The tenants included a law firm, a gourmet sandwich shop and the Bank of China, with the three signing leases totaling 19,835 sf.

The new law firm in the building is Fairbank & Vincent, which is relocating from West Los Angeles. The firm signed a five-year lease for 3,142 sf on the 38th floor, where it is expected to move in October.

Fairbank & Vincent was represented by Maureen Hawley and Matt Perrigue, formerly of the Staubach Co. and now with Jones Lang LaSalle. Broadway Partners was represented by Jones Lang LaSalle managing director John McAniff, vice president Tim Miller and leasing director Greg Nassir, all of whom also represented the building ownership in the other two leases.

The gourmet sandwich shop is Mendocino Farms, which has signed a 2,120-sf lease on the ground floor. Mendocino Farms, which plans to take occupancy in the summer of 2009 in a 10-year lease valued at $1.2 million, was represented by Reid Tussing, Anthony Gatti and Jason Feeley of Cushman & Wakefield.

Bank of China, the eighth largest bank in the world, has signed a seven-year, 14,573-sf square-foot renewal valued at $3.8 million for its offices on the full 39th floor. Bank of China was represented by Matt Renshaw and Mark O’Brien of CB Richard Elllis.

McAniff sums up the significance of the three deals to the Downtown LA market: “Bank of China’s long-term renewal is a testament to the commitment of foreign banks doing business in Los Angeles,” he says. “Fairbank & Vincent’s move to downtown reinforces the continuing trend of West Los Angeles firms migrating downtown, and Mendocino Farms is a new, successful retailer drawn to the vibrancy of Downtown Los Angeles.”

With the three new leases, nine tenants have now signed for 55,143 sf of space at Citigroup Center since late March of this year, according to the Jones Lang LaSalle team, which has represented the building in all nine of the deals. During that time, the occupancy has grown from 88% to 95% at the Citigroup Center.