A foreign investor has acquired the DreamWorks Campus in Glendale for $290 million. A joint venture between Chinese investor Hana Asset Management and OceanWest purchased the property from Griffin Capital Co., which acquired the 460,000-square-foot office campus in 2015 for $215 million. Asian capital is highly attracted to large, single-tenant office assets in West Coast gateway markets, and the brokerage team, led by Kevin Shannon, West Coast Capital markets president at NKF, assumed that the property would go to a foreign buyer early on in the sale process.
“This offering was never broadly launched,” Shannon tells GlobeSt.com. “NKF has had tremendous success in 2017 selling several large single tenant deals, which never had a formal broad marketing program. These include the Urban Union and Dexter Station sales in Seattle and Centre 425 in Bellevue, which were class-A office assets leased to Amazon and Facebook totaling $868 million. We have another major single tenant office deal under contract currently on the West Coast off market as well. Over 80% of the potential buyers on these deals were foreign buyers primarily from Asia and Europe. These buyers love looking at these types of assets off market. We knew Hana would be an aggressive buyer for DreamWorks given our extensive recent experience with similar profile deals. We always expected the buyer would be foreign for DreamWorks.”
Single-tenant properties, like this, are rare in Los Angeles, and this asset was particularly desirable, considering the strong, long-term tenancy. “The buyer was fortunate to source a major single tenant asset in the Los Angeles market,” says Shanon. “Foreign capital loves investing in single tenant long-term leased class-A office assets in gateway coastal markets like San Francisco, Seattle and Los Angeles. In Los Angeles, the most active office builders are REITS like Hudson and Kilroy who rarely sale. There has been only one single tenant office sale in Los Angeles over $100 million in the last five years excluding the DreamWorks transactions. It was a scarce single tenant opportunity in the nation's most desirable target market for foreign capital. Many foreign buyers strongly prefer less management intensive single tenant assets.”
While single-tenant office assets are rare in Los Angeles, foreign investors have been going to other West Coast markets, where there are more opportunities. In Seattle, for example, there is significant new construction of single-tenant office, and major tenants, like Amazon, to occupy them. “Seattle has had a robust pipeline for sale of newer single-tenant class-A office buildings mostly leased to Amazon as an example. Seattle though has an abundance of merchant builders who build, lease then sale,” he says.
The 15-acre campus is located at 1000 Flower Street in Glendale, and totals five separate buildings. Although Griffin Capital turned the property quickly to make a sizable profit, the buyer plans to hold the campus for the long-term. “The deal is a safe late cycle bet because of DreamWorks trophy lifestyle campus setting in conjunction with a long-term credit lease. In Los Angeles, tech and entertainment especially content creation are the growth engines driving our regional growth and attracting investment capital,” says Shannon. “Blackstone's recent recap of the Worthe portfolio in Burbank and the DreamWork's campus sale in Glendale reflect this on going capital markets trend.”
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Kelsi Maree Borland
