LOS ANGELES-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement, but GlobeSt.com has learned that Thomas Properties Group Inc. (has elected to exercise its option to liquidate TPG/CalSTRS LLC its joint venture with California State Teachers' Retirement System that owns City National Plaza in downtown Los Angeles, CityWestPlace and San Felipe Plaza in Houston and three properties in Northern Virginia.
In connection with the liquidation, on or before Sept. 30, 2013, subject to certain closing conditions, Thomas Properties Group will make an equity contribution of approximately $163 million to TPG/CalSTRS.
In the liquidation, TPG/CalSTRS will distribute to CalSTRS the contribution amount and the entities that own City National Plaza, subject to existing mortgage debt and will distribute to Thomas Properties Group the entities that own CityWestPlace and San Felipe Plaza in Houston and three properties in Northern Virginia, also subject to existing mortgage debt.
Unless waived by CalSTRS, the liquidation will be subject to CalSTRS having a binding agreement on its own behalf to sell City National Plaza to a third party immediately after the closing of the liquidation.
GlobeSt.com previously reported, the agreement gave Thomas Properties two options to exercise by the end of July: (1) They could end the JV and give City National Plaza to CalSTRS, while retaining the out-of-state properties; or (2) They could acquire all of CalSTRS' interests in the joint venture and its properties. If the company didn't act on either option before the end of the month, CalSTRS had the right under the agreement to have City National Plaza transferred to its control.
The twin towers of City National Plaza have 2.5 million square feet and were acquired by the joint venture in 2003. At the time of purchase, it had approximately 20% occupancy. Under Thomas Properties' management, the project's infrastructure has been upgraded, and the project has attained LEED gold certification. It also has attracted two top-tier plaza level restaurants and is now close to 90% leased.
“We are proud of our accomplishments in reestablishing City National Plaza as the premier property in downtown Los Angeles,” says Thomas Properties chairman and CEO James A. Thomas. “We believe this is an opportune time to significantly increase our interest and take control of the Houston assets currently in the joint venture, representing over 2.5 million square feet of class A office space in some of the strongest submarkets of Houston. The Houston market is growing and is attracting increasing levels of both domestic and foreign capital, which is driving values in the market.”
Thomas Properties has significant cash on hand as a result of its non-core disposition activity over the past couple of years and is also in advanced discussions with potential capital providers to participate in funding the Contribution Amount.
“Thomas Properties has achieved great results with these joint venture properties, creating significant value since the venture acquired them,” said Mike DiRe, managing director of real estate for CalSTRS, in a prepared statement. “We determined that now is the time to monetize our investment in this venture, and we look forward to continuing our successful relationship with Thomas Properties.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
