BURBANK, CA-A joint venture has completed the acquisition of two class-A office properties in the heart of the media district. Price was just over $342 million.
Hudson Pacific Properties Inc. and M. David Paul & Assoc./Worthe Real Estate Group have purchased Pinnacle I and Pinnacle II. The buildings are situated on a 4.3-acre campus directly adjacent to Warner Bros. Studios and Burbank Studios and blocks away from Walt Disney Studios.
Pinnacle I and Pinnacle II are currently 95% leased. Pinnacle II is 100% leased to Warner Bros. through Dec. 2021. Pinnacle I tenants include NBC Universal, Sony and Clear Channel Communications.
The Pinnacle is a two-building, 625,640-square-foot office property. The acquisition of the 393,776-square-foot Pinnacle I building by the joint venture closed on November 8 last year for a purchase price of $212 million, $129 million of which was financed with a new 10-year project loan.
In connection with the acquisition of Pinnacle I, Hudson Pacific contributed approximately $83 million in exchange for approximately 98% of the joint venture, reflecting certain credits and adjustments among the partners. Pinnacle II is a 231,864-square-foot property. Effective June 14, MDP/Worthe completed contribution of its 100% interest in the Pinnacle II building to the joint venture for a total gross purchase price of $130 million. The Pinnacle II building was contributed subject to an existing $89-million project loan bearing interest at a fixed annual rate of 6.313% and maturing on September 6, 2016.
Hudson Pacific Properties, Inc. did not make a capital contribution in connection with the contribution of the Pinnacle II building to the joint venture, but the company's ownership interest in the joint venture has been adjusted to reflect the contribution of the Pinnacle II by MDP/Worthe, such that the company's ownership interest in the joint venture is now 65%, with the remaining 35% owned by MDP/Worthe.
With the closing of this transaction, the joint venture now owns both buildings for a combined purchase price that's slightly higher than $342 million, subject to just over $218-million of project financing.
Victor J. Coleman, chairman and CEO of Hudson Pacific, said “the Pinnacle provides Hudson with an immediate foothold in one of the top media and entertainment submarkets in Los Angeles. With only a handful of expiring leases over the next few years, and limited non-re-occurring capital improvements, this stabilized, high-quality asset is extremely complementary to our portfolio.”
As previously reported by GlobeSt.com, the Holiday Inn in the Burbank Media Center has recently undergone a $15-million renovation.
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