Rising Realty Strikes Historic $200M Deal on Downtown LA's Priciest Building
In the three years since Rising Realty Partners picked up PacMutual in Downtown LA, it's transformed the property into one of the most sought-after spots in the city. And in what could be one of the biggest and most successful commercial office flips in LA history, Rising has sold the historic building for a hefty profit. Bisnow spoke with Chris Rising early this morning to get the details.
Chicago-based Callahan Capital Properties and Montreal-based Ivanhoé Cambridge made the roughly $200M buy. Chris (snapped with Zaya Younan at Bisnow's 5th Annual Los Angeles State of the Market) tells us the firm gave about 100 tours and received 20 offers in the few months it's been on the market. Eastdil Secured handled marketing at the 464k SF building, and paired with Industry Partners, which worked the roughly 100 leases signed at the building in the last three years.
Rising Realty bought PacMutal in 2012 for $60M, and then spent nearly $20M on the repositioning, making the campus an attraction. Last year, it brought on Lionstone Investments as new equity partner after recapitalizing the property. The landmark at at 523 6th is actually three connected buildings that were constructed between 1908 and 1926. This is the first Ivanhoé Cambridge/Callahan Capital Properties acquisition in LA, but the companies say they look to expand their presence in the market.
Rising hasn't really stopped working on improving PacMutual, leaving the buyers without a whole lot to do on the capital improvement front. Chris says Rising Realty will remain associated with the building as property manager and that though the heavily lifting is done, the buyers still have some value-add projects in mind. Earlier this year, the firm installed a more than 80-foot-tall living wall at the property. And tenants have responded. When the company picked up the building, its last lease was done at about $1.80/SF. Today, rents start at $4/SF, making it DTLA's priciest building. Just 50% leased when Rising bought it, anchor tenants at the now more than 95% occupied building include NastyGal and law firm Hueston Hennigan, which signed a $60M lease this year.
And though Rising has made some recent acquisitions, such as the 270k SF Figueroa Courtyard, which it has rebranded as Park DTLA, it's sold most of the 10 buildings it purchased from Bank of America near the end of 2013 across the greater Valley region. The firm's also trying to sell 4500 Park Granada (shown in a concept rendering by NBBJ) in Calabasas. Bank of America, the tenant, will be exiting the property at year-end, and CBRE is actively marketing the 20-acre campus.
To reposition some of its new-found capital, Chris (whom we snapped here with his dad, partner and real estate legend Nelson Rising) tells us the company is closing in on a major LA buy in about three weeks, though he declined to discuss details just yet. Chris says the new breed of what he calls "lifestyle office," where you're creating a 24-hour experience, is really the future of business, and the company will continue to look for assets in that space.