UPDATED, Dec. 11, 8:59 a.m.: Kennedy Wilson has sold an office property in Glendale for a nearly 60 percent haircut, serving as a benchmark for how far office values have fallen in the last few years.
The firm sold 400 and 450 North Brand Boulevard for $60 million, or $136 per square foot, according to property records filed with L.A. County. A team led by Newmark’s Kevin Shannon, who declined to comment, marketed the property for sale.
Kennedy Wilson bought the 441,000-square-foot complex for $144 million in 2017 — about $327 a foot, records show. The firm did not respond to a request for comment. About 77,000 square feet of the property is retail.
The buyer is a limited liability company managed by Ben Li, an accountant based in El Monte, who could not be reached for comment. No loan was recorded in connection with the purchase, making it likely the buyer paid in cash.
The sale confirms a recent trend of non-institutional outsiders cashing in on opportunities to acquire offices — at low prices.
“My buyer pool has gone from 100 percent institutional to 100 percent family office,” Laura Stumm, who works with Shannon at Newmark, said at TRD’s Los Angeles Forum in September.
The 400-450 Brand property traded at a lower price-per-square-foot basis than other Glendale offices have in the last year and a half, though few trades have happened at all. In June 2022, Hacienda Associates bought 225 West Broadway for $27.5 million, or about $217 per square foot.
As of November last year, the buildings were about 92 percent leased, according to marketing materials at the time. However, in April, the complex’s largest tenant, Applebee’s and IHOP owner Dine Brands, exited its 106,000-square-foot lease once it expired in April.
Other tenants include Cigna, which occupies about 62,000 square feet; the California Nurses Association; co-working firm Regus; and Learner’s Digest. Some of the leases expire next year.
The sale comes after Kennedy Wilson reported a $92 million loss in the third quarter, compared to a net loss of $47.3 million the prior quarter, according to an earnings release last month. During the same period last year, the firm reported a $16.4 million profit.
The company attributed the significant loss to the fact it had to adjust the values of some assets to reflect current market conditions — the accounting practice known as mark-to-market.
On an earnings call, however, CEO Bill McMorrow said Kennedy Wilson was looking to expand its credit business and lending platforms and take advantage of opportunities from “market dislocations.”
The sale will free up liquidity for Kennedy Wilson to pay down its corporate debt. In June, ratings agency Moody’s downgraded Kennedy Wilson’s corporate ratings, citing high leverage.
“KW’s earnings have been more volatile in recent quarters due to a slowdown in investment activity, lower capital gains on asset sales, and a material decline in fair value income from its co-investment portfolio,” Moody’s wrote in June.
This story has been updated to reflect that 400 and 450 North Brand Boulevard span 441,000 square feet of commercial space.
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