EXCLUSIVE: JPMorgan to Buy Fox Interactive Office for $300M

In one of the biggest real estate deals in Los Angeles in years, the sale of the 501,000-square-foot, two-building complex is expected to close next week.

In one of the biggest real estate deals in Los Angeles in years, the asset management arm of JPMorgan Chase & Co. has agreed to pay about $300 million for a large office development in Playa Vista that is leased by Fox Interactive Media, the News Corp. unit that includes MySpace, according to multiple sources with knowledge of the transaction.

The sale of the 501,000-square-foot, two-building complex at 12121 and 12181 Bluff Creek Drive by Lincoln Property Co. and ASB Real Estate Investments breaks down to a robust price of about $599 per square foot. The deal for the property, called the Horizon at Playa Vista and located in the recently developed office portion of the Playa Vista community, went under contract in late December and is expected to close next week.

“This deal continues to validate Playa Vista -- that if you build quality buildings, you will attract superior tenants, institutional lenders and long-term investors,” said Cushman & Wakefield Inc. executive vp Carl Muhlstein, a commercial real estate broker who has long done business in the Playa Vista area. The broker said he was  “aware” of the transaction but declined further comment.

Buyer JPMorgan Asset Management - Real Estate, which is part of New York financial services firm JPMorgan Chase’s asset management division, also owns 2000 Avenue of the Stars, CAA's Century City headquarters.

Fox Interactive and Lincoln Property declined to comment; JPMorgan and ASB Real Estate did not return phone calls seeking comment.

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The office complex, which also contains some retail space, is adjacent to the master-planned residential community of Playa Vista, which has been built over the last decade or so near Marina del Rey. The two Class A buildings, which are situated on about seven acres, were completed by Dallas-based Lincoln and ASB of Bethesda, Md. in 2009. The companies have nearly completed construction of a second, 290,000-square-foot phase of the Horizon development.

In 2008, Fox Interactive signed a 12-year lease for roughly 430,000-square feet, or 90 percent, of the complex. That $350 million deal was the biggest in Los Angeles since MGM signed a $500 million lease for headquarters space in Century City in 2000. Fox Interactive had planned to move 2,000 employees into the two five-story buildings.

However, the space is mostly vacant. In the face of financial difficulties and the restructuring of New York-based News Corp.’s digital operations, Fox Interactive said in 2009 that it would not occupy the property and instead sublease the space. The company is still trying to sublease the vacant offices, and FoxSports.com is the only tenant, occupying less than 50,000 square feet of the complex.

Still, the deal is good news for a commercial real estate market that has taken its lumps in recent years. Bob Safai, another commercial real estate broker with knowledge of the transaction, said the sale is a bellwether deal, reflecting a commercial real estate market that is on the rebound. During the recession, high-quality office properties have traded hands for as little as $400 per square foot -- far below the per-foot price of the Horizon complex.

“It shows you investors are bullish on the market and believe the market has come back,” said Safai, a principal of commercial real estate brokerage Madison Partners. “You have to go back to 2007 to see a price like this.”

Horizon is across from the former headquarters of Hughes Aircraft Co., a sprawling property that real estate developer Ratkovich Co. of Los Angeles purchased late last year for $32.4 million. Ratkovich plans to spend $50 million to convert the property, which still includes the massive airport hangar that housed the Spruce Goose airplane, into an entertainment office campus.

Eastdil Secured Llc., the New York-based commercial real estate brokerage that represented both sides of the deal, also could not be reached for comment.

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