Arbitrator's ruling means Sony rent to more than double. (Real Estate).

AN arbitrator's ruling against Sony Pictures Entertainment in a dispute over air market rent at the studio's Culver City headquarters could tuck on an additional $19 million in rent over the next five years.

The arbitrator, Richard Volpert, a partner at Munger Tolles & Olson LLP, ruled in favor of Transpacific Development Co., landlord of Sony Pictures Plaza, which was attempting to raise Sony Picture's rent to $710,000 a month, or about $2.15 a foot, for the five-year period ending Dec. 31, .2007, according to sources close to the process.

Sony Pictures, which occupies the entire 330,000-square-foot building at 10000 Washington Blvd., lost in its attempt to have its rent pegged $391,000 a month, or about $1.18 a foot, according to sources.

While the rate is still below market, Sony Pictures is left with no choice but to swallow the increase. It signed a 35-year lease for its space in 1993 in a deal that called for the monthly rent to adjust to fair-market value at five-year intervals between 1998 and 2008. Both parties have an opt-out clause at five-year intervals beginning in 2013, according to sources.

Susan Tick, a spokeswoman for Sony Pictures, confirmed the decision, but said "there are some unresolved points." She would not elaborate on those points or discuss financial specifics. "We clearly are not happy with the decision but you live with it," she said.

Michael Meyer, the partner at Pillsbury Winthrop LLP representing Sony Pictures, did not return calls. Thomas Irish, president of Transpacific, which owns about 3 million square feet of commercial property in California and Hawaii, would not comment.

The decision more than doubles the rent for Sony Pictures, which had been paying $270,000 a month, or about 82 cents a foot during the previous five-year period, according to one source. The entertainment company had won an arbitration case against the former landlord, the Altajir Family of the United Arab Emirates, in 1997, two years before Transpacific bought the building, pegging its rent at about a third of the asking rate for Class-A space in Culver City.

"We brought to bear a lot of credible evidence, and that's why (the arbitrator) sided with us," said Anton Natsis, partner with Allen Matkins Leek Gamble & Mallory LLP, who represented Transpacific.

The "baseball style" ruling -- where an arbitrator chooses either the landlord's figure or the tenant's, depending on which is closer to the market -- also highlighted a huge discrepancy in perception of fair market rent, said Paul Rutter, partner at Santa Monica-based Gilchrest & Rutter, who has served as an arbitrator.

"Wow, that's a very large award," said Rutter. "A 10 percent difference is enough to fight about, so that's a huge disparity."