Deal of the century for Morgan: N.Y. firm is nearing purchase of towers.

CENTURY CITY - A big New York banking firm has wrested away the lead position to buy the landmark Century Plaza Towers complex, in what is to be the biggest real estate transaction in the nation this year, the Business Journal has learned.

That lead position had been held by an investment group headed by Hong Kong's wealthy Lo family.

But pension funds advised by an affiliate of J.P. Morgan & Co. Inc. have now elbowed out the Hong Kong group and are inching close to a deal, real estate sources confirmed last week.

Actually, Morgan's bid is said to be slightly below the Lo figure - roughly $480 million vs. $495 million - for Century City's signature twin triangular office towers, adjacent land and big underground parking garage.

However, informed sources said the sellers are more comfortable negotiating with the Morgan group - primarily because it has already performed extensive "due diligence" analysis of the property.

That analysis would enable the Morgan group to close a sale more quickly than the Lo-led group, which operates in the United States as Pacific Eagle Holdings Corp.

Even at Morgan's lower price, the transaction would be the biggest single-property U.S. real estate investment this year, if the sale closes by year end.

A spokesman for Prudential Insurance Co. of America, which owns a 50-percent equity stake in the Century Plaza complex, declined to comment on the negotiations.

A Morgan spokesman said the investment management group's representatives "are continuing with discussions on behalf of our (pension) clients, but there are no final agreements in place."

The Century Plaza property includes the twin 44-story "theme" towers, which together contain 2.25 million square feet of space; one of the world's biggest parking garages, with some 6,000 subterranean stalls; and the adjacent ABC Entertainment Center complex.

The ABC center is controlled by an investment group headed by Japan Leasing (USA) Inc. under a master lease arrangement. Control of that center reverts back to the Century Plaza ownership when that leasehold effectively expires in 2002.

The current owner is a partnership known as Delta Towers Joint Venture, which includes Prudential and an international consortium headed by Citicorp's real estate lending affiliate.

Delta Towers has engaged Eastdil Realty Inc. to negotiate a sale of what is considered the Westside's highest-profile commercial project.

Other top bidders for the property include an affiliate of Chicago's Equity Office Holdings LLC - which just purchased downtown L.A.'s Two California Plaza highrise for nearly $100 million (see story page 28) - and the Sultan of Brunei.

Jack Rodman, director of national accounts with accounting/consulting firm E&Y/Kenneth Leventhal, noted that the aggressive bidding reflects the abundance of institutional and offshore capital chasing local real estate now that L.A.-area markets are thought to be on the rebound.

The potential investment by J.P. Morgan or any of the other bidders would provide "great upside potential," as the Westside office market continues to improve, Rodman said, adding that the buyers would likely participate in a major entertainment-oriented upgrade of the ABC center at some point in the future.

The Morgan advisory group, called J.P. Morgan Investment Management, has been among the more aggressive buyers of L.A. office properties. Last summer, an affiliated entity led the group that purchased Santa Monica's big Water Garden I office complex for about $190 million - still the biggest office acquisition L.A. has seen so far this decade.

Another Morgan affiliate followed later last year with the approximately $20 million purchase of the luxurious Wilshire Crescent office building that billionaire investor Kirk Kerkorian developed but never fully completed at 9333 Wilshire Blvd. in Beverly Hills.

A Century Plaza Towers purchase by the Morgan group would likely entail additional prestige-property leasing and management work for West L.A.-based Tooley & Co.

Sources confirmed that Tooley is helping Morgan structure and negotiate the Century Plaza Towers acquisition.

Morgan also engaged Tooley to handle those functions at the Water Garden, and Tooley is helping to market the Wilshire Crescent property. (The Wilshire Crescent marketing team is close to consummating a lease transaction through which PolyGram's local offices would take over the entire 108,000-square-foot property, sources said.)

Tooley also already handles management and leasing at the ABC Entertainment Center on behalf of the Japan Leasing-headed group that leases the center from landowner Delta Towers.

Tooley executives were not available for comment last week.