WME Settles Real Estate Litigation

The talent agency backed out of a lucrative Beverly Hills lease after the merger of Endeavor with the William Morris Agency.

4:43 PM PST 1/26/2012 by Daniel Miller

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235-269 N. Beverly Drive

William Morris Endeavor has settled litigation over a Beverly Hills building that the talent agency had agreed to occupy. Terms of the settlement will not be made public but one source pegged the deal at being in the $30 million range.

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WME declined to comment. WME's attorney, Tony Natsis of Allen Matkins, did not immediately return phone calls and emails seeking comment.

THR first reported in July that WME was appealing an arbitrator’s ruling against the talent agency in the dispute over the building that developer George Comfort & Sons Inc. built on Beverly Drive for William Morris Agency, WME's predecessor firm. While the arbitrator had determined that George Comfort & Sons violated its lease agreement with the agency by allowing Gersh, a competitor, to move to another Comfort-owned building next door to the proposed WME site, it was determined that this breach was not material enough to warrant WME walking out on the lease.

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William Morris Agency had agreed in late 2007 to occupy the entirety of the six-story 235-269 N. Beverly Drive building. But William Morris’ 2009 merger with Endeavor threw a kink into its plans to move from nearby El Camino Drive offices to the new building, which was under construction at the time. WME backed out of the lease deal and has been headquartered nearby at 9601 Wilshire Blvd., in the building that housed Endeavor, since April 2009.

WME’s subterranean parking facilities would have been adjacent to those of Gersh, which is located next door at 9465 Wilshire Blvd., and WME brass apparently bristled at the prospect of sharing a valet with a rival. The lease, negotiated by former WMA chief Jim Wiatt, is said to guarantee exclusivity to the talent agency. Gersh moved from offices nearby on Canon Drive to its Wilshire Boulevard building in 2009.

George Comfort & Sons initiated legal proceedings against WME in September 2009. The agency took the case to arbitration, where an arbitrator ruled against WME. The talent agency then appealed the arbitrator's decision. The settlement of the case will end the legal proceedings.

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WME likely would have moved into the Beverly Drive building in 2010, though MGM signed a lease for the property at issue in December 2010, mitigating some of the developer’s potential losses. MGM has since move into the building, which was designed by architecture firm Gensler. Terms of MGM's lease with George Comfort are not known, though the Lion’s deal for the 144,000-square-foot, Class A property is believed to be less lucrative than the one William Morris inked near the top of the real estate market, before the economic downturn.

George Comfort & Sons did not immediately return a phone call seeking comment.

Email: Daniel.Miller@THR.com

Twitter: @DanielNMiller