LBA Realty has struck a deal to buy a downtown Los Angeles office building previously owned by MPG Office Trust Inc., according to trade reports.
Irvine-based LBA is said to have closed on a deal to buy 550 S. Hope St., a 28-story high-rise that totals close to 600,000 square feet.
The sale price was about $158 million, according to trade publication Commercial Real Estate Direct, which first reported the deal. That works out to about $260 per square foot.
The office tower had about $200 million in debt tied to it and was in default on its loans since mid-2009. It was about 80% occupied at the end of last year.
The building has the California Bank and Trust name on its top and is located close to the US Bank Tower, the largest office building in Los Angeles. That building, also owned by MPG Office, was placed into special servicing about a month ago.
LBA Realty’s buy is one of the larger office deals seen in Southern California so far this year, and another sizeable acquisition of former Maguire Properties Inc., which changed its name to MPG Office last year.
LBA also snapped up two parts of Irvine’s sprawling Park Place office and retail campus in a pair of distressed deals with MPG Office. The Park Place properties had about $270 million in debt tied to them.
Grubb Battling
C. Michael Kojaian— the chairman of the board of Grubb & Ellis Co., and the largest individual shareholder of the Santa Ana-based real estate company—may not be completely on board with the brokerage’s recent financing deal with a Los Angeles hedge fund, based on a reading of recent regulatory filings.
Colony Capital LLC, a Santa Monica-based hedge fund led by billionaire real estate investor Tom Barrack, has warned that it will hold Grubb responsible if Kojaian fails to live up to the deal’s exclusivity agreement.
The moves are the latest in the drama with Grubb, which has been working to shore up a balance sheet hammered by the commercial real estate downturn as well as an ill-fated combination with Santa Ana-based NNN Realty Advisors in 2007.
Grubb is carrying more than $140 million in debt, including $90 million of preferred stock, a Wall Street Journal story noted last month. The company counts a market value of about $45 million.
In late March, Grubb said it struck a potentially lifesaving, $18 million finance deal with Colony Capital.
The financing could lead to a “potential larger strategic investment,” according to Colony, which now has about an 8.9% stake in Grubb and is now said to be going through the brokerage’s financials.
Colony has until the end of May to negotiate terms of a larger investment. It also has exclusivity rights on negotiating a deal during that period.
That isn’t sitting well with Kojaian, based on an April 22 letter he submitted to Grubb and filed with the Securities and Exchange Commission.
Kojaian said he didn’t participate in the board’s consideration of the commitment letter, or the exclusivity agreement, with Colony. And while he said that he is “mindful of my fiduciary duties” as a director of the company, Kojaian indicated that his role as a major shareholder could end up trumping his director role.
“I do not consider myself personally in my capacity as a shareholder and as a representative of the Kojaian shareholders to be (bound) by the exclusivity agreement,” his letter said.
Kojaian and his affiliates own about 30% of Grubb’s outstanding common stock, factoring in the company’s preferred convertible stock. He believes he still has the right to discuss a proposed financing directly with Colony, negotiate deals with other parties, and vote against any proposed deal, among other options.
“My duties as a director will not limit the range and exercise of the rights of the Kojaian shareholders,” the letter said.
In a follow-up letter filed with the SEC on April 25, Colony told Grubb officials that they will hold the company responsible “for any violations of the exclusivity agreement.”
Colony’s letter indicated the hedge fund still is weighing its options for Grubb and could propose or consider a variety of investment actions, including an outright acquisition or “an extraordinary corporate transaction,” such as a merger, reorganization or liquidation of the company.
