EXCLUSIVE: Auction for William Morris Headquarters Called Off
Lender negotiating with borrower to take ownership of property and would 'more than likely be entertaining offers to purchase' the buildings.
The auction of the headquarters of WMA has been canceled, but that doesn't mean the three-building Beverly Hills complex still won't be sold.
The lender on the property, Brickman, a New York real estate investment firm, had planned to sell the loan that owner Cape Horn Group took out to buy the property on El Camino and Rodeo drives from WMA in September 2008.
An e-mail sent to real estate industry players on Wednesday by Marc Renard, the Cushman & Wakefield broker who has the listing, said that the auction was being postponed because the lender and borrower are now negotiating a settlement of the matter.
According to Renard's message, the resolution would "involve a consensual transfer of the property to the lender." Such a deal would likely necessitate a deed in lieu of foreclosure -- an instrument that allows a lender to take ownership of real estate from a borrower who is in default without having to foreclose on a property.
The e-mail also indicates that if Brickman is able to gain ownership of the property, it would "more than likely be entertaining offers to purchase" the buildings.
Renard and Brickman did not return phone calls seeking comment.
The buildings at 150 and 151 S. El Camino Drive and 150 S. Rodeo Drive were sold by WMA to Cape Horn, a Chilean company with offices in Miami, for $143 million.
A sale at auction was far from a sure thing because the 182,649-square-foot property is now worth less than the outstanding debt on it, according to sources. About $90 million is owed on the note. A source has pegged the current value of the property at about $80 million.
WMA, which long occupied both El Camino Drive buildings, began leasing space in the complex from Cape Horn after the sale. WME, its successor agency, now occupies a portion of the complex; the firm's commercial and music departments are housed there, along with part of its accounting group. WME has been headquartered nearby at 9601 Wilshire Blvd. since April 2009.
At the time of the September 2008 sale, WMA said it planned to stay at the El Camino buildings until a new Beverly Drive building it planned to occupy was complete. However, the agency's 2009 merger with Endeavor threw a kink into those plans. WME has backed out of an agreement to occupy the new building, built by New York-based commercial real estate firm George Comfort & Sons. The matter is subject of an arbitration hearing between WME and the developer next month. Meanwhile, rival agency UTA is said to be interested in the Beverly Drive building.
WME declined to comment. Cape Horn could not be reached for comment.