LOS ANGELES—Lincoln Property Co. and its joint venture partner Angelo, Gordon & Co. has sold 800 Wilshire, a 227,000-square-foot office tower in Downtown Los Angeles, to the Onni Group. Lincoln purchased the property in 2013 with a four-year business plan to redevelop and reposition the asset into a class-A creative office property, but was able to complete the plan and drive occupancy to nearly 95% in two years. While the details of the sale were not disclosed, industry sources unrelated to the deal have told GlobeSt.com that Onni purchased the property for $80 million.
"If you look at Downtown Los Angeles as a target, 800 Wilshire is the bull's eye," David Binswanger, senior EVP at Lincoln Property Co., tells GlobeSt.com. "We looked at it and said that this is a commodity class-B office building that has had out-of-town ownership; is in need from a refresh from a architectural perspective; and had dark retail in the ground floor. We put in an 800-Degrees Pizza, which activated the ground floor, and brought in a hotel architect to redo the office lobby and the common areas, which gave the property an intimate feel. We thought it was going to take four years to accomplish that business plan, but it took two years. Because of all of the market forces and because of what we did on the asset, it was time to sell. This was always going to be a transitional asset, and it was time to monetize."
Lincoln Property Co. purchased the property in 2013 for $48.2 million. In the last two years, following a capital improvement plan, the investor increased occupancy from 60% to 95% and drove rents from $28.50 to nearly $36. Binswanger credits the success, at least in part, to their local knowledge and presence in the market. "This was an interesting process because it had been on the market and not traded, and we, being that we office one block over, really saw this as a different opportunity," he says. "There is this shift to more creative and a shift to move southward in Downtown Los Angeles, so it was really the combination of those things the made it an attractive opportunity for us."
Although Onni doesn't have the same boots-on-the-ground advantage, Binswanger says that the momentum in the market today will allow them to continue to build value in the building. "I think that there are a lot of things going for Downtown L.A. There is a lot of money being invested, and it is happening in pockets all around Downtown, but as they solidify and as they begin to connect to one another, there are going to be some real bright spots, not just in the multifamily and retail asset classes, but in the office market as well," he explains. "I think there are some successes that are happening now that are undeniable and that will forever change the trajectory of the market. Downtown is going to be a fully functioning city inside of the greater Los Angeles market."
Marc Renard, vice chairman the capital markets group at Cushman & Wakefield, led the marketing of the building, securing 11 offers from a diverse pool of buyers. Even after a best-and-final round, there were five buyers actively competing for the property from every category of investors. "To me, that says that downtown was on everybody's radar and this building was diverse enough to appeal to all of those different categories of buyers," says Binswanger.
This is one of several properties that Onni Group—a Vancouver, Canada-based developer—has purchased in Los Angeles this year. The firm most recently purchased the Manhattan Beach Towers, a 309,000-square-foot office tower, for $95 million. It also completed construction of LEVEL DTLA, a $200 million apartment complex, earlier this year.
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Kelsi Maree Borland
