Arboretum gateway sale price expected to break records.

EVEN in a Westside market where cash-rich investors are bidding up office building prices, the pending sale of Santa Monica's Arboretum Gateway is likely to raise eyebrows.

Sources familiar with the transaction said the 201,000-square-foot property at 2220 Colorado Ave., fully leased to Universal Music Group, was under contract to New York-based ING Clarion Partners in a deal that approaches a record-breaking $500 per square foot.

"With so little on the market and such a strong desire for Westside properties, a product like that is going to get very good pricing," said CB Richard Ellis Inc. Senior Vice President Tom Bohlinger, who is not involved in the transaction.

A unit of investment bank Lazard LLC, which has an equity stake in the property and managed the asset for majority owner Corporate Office Properties Trust, is marketing the property. The Columbia, Md.-based real estate investment trust bought the building in the first quarter of 2001 for $82.4 million from M. David Paul & Associates LLP. The property is expected to be sold for close to $100 million.

Officials of ING and Corporate Office Properties did not return calls. Lazard officials declined comment.

Universal Music Group is locked in as the building's sole tenant for another seven years, leaving a new owner little room to add value in the near term.

But Bohlinger called the Arboretum Gateway a very low-risk investment because of its single, high credit status tenant. "You're effectively buying a corporate bond," he said.

The $412-per-foot paid by Corporate Office Properties Trust when it bought the building was top dollar at the time.

In raising the bar, the deal may be a harbinger of the price Colorado Center could bring.

A six-building, 1.2 million-square-foot complex, across the street from the Arboretum Gateway, was listed for sale last month by Tishman Speyer Properties Inc. Sources said it had received about 15 bids ranging from $420 million to $450 million.

Hollywood Shuffle

The CNN building, at 6430 Sunset Blvd. in Hollywood, has been sold for $35 million to a Portland, Ore.-based real estate investment firm, according to a source close to the transaction.

ScanlanKemperBard Cos. has agreed to pay close to the $170 a foot asking price for the 206,000-square-foot, 14-story building. Robert D. Scanlan, the firm's principal, did not return a call seeking comment.

The sale is expected to close by week's end. The property, whose main tenant is cable news channel CNN, was put on the market a month ago by its owner, a partnership of Meringoff Equities Inc. and Blackacre Capital Group.

Robert Langer, managing partner of Meringoff Equities, confirmed the sale but declined to comment on the price. "We are very satisfied with the transaction." Langer said.

Figs to Market

Northridge Capital, based in Washington, D.C., has retained Secured Capital Corp. to market its 615,000-square-foot complex at 201 and 221 N. Figueroa St.

Kevin Fay, vice president at Northridge Capital, said the company was trying to take advantage of a market in which investors are scouring the region for properties.

"Northridge Capital has decided to sell Figueroa Plaza to capitalize on strong investor interest in well-leased downtown Los Angeles office buildings," Fay wrote in an e-mail.

"The revitalization of downtown Los Angeles, evidenced in the recent opening of the Disney Concert Hall, new cathedral and thousands of residential units has been and will continue to be the major real estate story of Southern California."

While a price wasn't listed, brokers familiar with the complex said it could fetch between $175 and $200 per square foot. That would be a premium for Northridge Capital, which bought the plaza from a joint venture of Goldman Sachs Whitehall Street Real Estate Funds and Insignia Financial Group for $90 million, or $146 a foot.

Still, some brokers said recent sale prices haven't reflected the value of what the buildings' tenants are paying in rent.

"Look at vacancy rate and rental rates--there hasn't been that much of a change," said Studley Executive Vice President Mark T. Sullivan of the last two years. "But asking rates have been on the rise while direct rental rates haven't been. There's optimism in the investment community that with all the great things going on downtown that rents will rise in the future because the prices being paid don't make sense rental-wise."

City Sublet 

The city of Los Angeles signed a $3 million lease for 50,000 square feet at the Garland Building, 1200 W. Seventh St., in a five-year sublet deal.

The Department of Recreation and Parks will occupy the space in a deal struck with Aetna. It's the second sublease the city has taken from the insurance company. Last year, the city inked an 82,000-square-foot deal for a portion of its space in the 12-story building for the Los Angeles Department of Housing.

Jeff Ingham, regional leasing director at Jones Lang LaSalle, along with Dan Baumeister and James Malone represented Aetna in the transaction. David Kluth of Studley and Onno Zwaneveld of Trammell Crow represented the city.

Staff reporter Andy Fixmer can be reached at [phone], ext. 263, or at [e-mail].