Fox deal shows Marvin Davis is savvy as always.

Billionaire Marvin Davis has put to rest any doubts about his legendary sense of market timing.

By agreeing to buy back the Fox Plaza skyscraper in Century City for the near-record price of almost $400 per square fool, Davis is forking over the second-highest price per foot ever paid for a West Coast office building.

Granted, buying at a high price typically reflects poor timing. But this deal is the exception.

That's because Davis sold his 50-percent equity interest in that very same building 10 years ago for considerably more.

The exact price is not a matter of public record because it was an equity sale, rather than an outright property sale. However, industry sources said the equity sale price Davis received was equivalent to approximately $425 a foot - if it had been an outright property sale.

Once 10 years of inflation is factored in, that $425-a-foot price becomes equivalent, in today's dollars, to more than $600.

So Davis is buying back the tower for about two-thirds the amount he got for his interest in the building a decade ago.

More importantly, he is buying it back at a time when L.A.'s commercial real estate cycle is on an upswing, whereas that cycle was peaking and about to crash when he sold out 10 years ago.

Fox Plaza's tenant roster is a who's who of L.A.'s richest and most powerful. Davis himself maintains his Davis Cos, offices there, as does his son, John, a movie producer. Former President Ronald Reagan and his foundation occupy the building's 13,000-square-foot penthouse suite - as well as investment firm Donaldson Lufkin & Jenrette.

Davis was traveling late last week and unavailable for comment, according to his spokesman, Michael Sitrick.

One source said the sale of the landmark tower, which overlooks the 20th Century Fox movie studios and is known for its starring role in the "Die Hard" movie series, is the latest indication that the time is right to purchase Westside office properties.

"If Marvin is buying, it's time to buy," the source said. "When has he ever been wrong?"

Indeed, Davis played out a similarly shrewd scenario in Northern California in 1980 when an investment group he headed sold the famed Pebble Beach golf resort to Japanese investor Minoru Isutani for $850 million.

Property values subsequently tanked, and Isutani ended up selling the property in 1992 to another Japanese group for $500 million - at a loss of $350 million.

Davis was reported to be investigating buying back Pebble Beach in 1993, but ultimately decided not to.

Yet another big real estate deal on which Davis profited handsomely was his 1979 sale of the 23,000-acre Douglas Ranch in Colorado to Mission Viejo Co., which the Denver Business Journal had dubbed as "the last great land sale in this country." Mission Viejo has since transformed the property into Highlands Ranch, one of the country's largest master-planned communities.

As for Fox Plaza, Davis actually co-developed the tower along with 20th Century Fox through his Miller-Klutznick-Davis-Gray Co. real estate firm, which has since disbanded. Davis and Fox co-owned the facility until Davis sold his 50-percent equity interest to the movie studio in 1987.

Fox then sold the building to an investment fund of LaSalle Partners in 1988 for $320 million, or about $450 a square foot - then and now the highest per-foot price ever paid for a West Coast office building.

Within a few years after LaSalle bought the tower, L.A.'s economic recession sent local office property values plummeting to a fraction of their late-1980s peaks.

In short, Davis and Fox got out just in time, and LaSalle jumped in at exactly the wrong time. LaSalle spokeswoman Magnes Welsh last week would say only that the deal was "aggressively priced" for today's market.

"We have achieved record leasing economics in the market, and this is the highest price paid for any building on the West Coast in many years," she said.

Welsh did not discuss details of the transaction, saying that LaSalle is restricted in what it can say because of confidentiality agreements with the buyer and because LaSalle is in a quiet period for its pending initial public stock offering.

Welsh did say that LaSalle expected all along that Fox Plaza would fetch a premium price.

"Our belief is that the building was priced aggressively because of four factors," she said. "The outstanding office market in Century City, the supply constraints in the Century City office market, the consistently high rents because of the quality of the building, and the significant cash flow that the building generates." She said the building has been fully leased for years.

The Fox sale was also the second time in two years that Davis has figured prominently in a high-profile Westside office building deal. In June 1995 Davis and Los Angeles developer Jerry Snyder joined with an investment fund managed by J.P. Morgan to buy and restructure the mortgage on the first phase of the 666,000-square-foot Water Gardens office complex in Santa Monica.

The fund paid $190 million for the Water Garden property, or about $285 per square foot, according to Snyder, who said the rising prices for Westside office space reflect the improving economy, the demand by the entertainment industry for Westside space and the lack of new construction.

All of these factors have driven up rents, which means it now makes financial sense to pay top prices for office buildings, Snyder said.

"What finally happened is that rents have reached the point that it makes it financially viable to pay these prices," said Snyder, who said some prime space in the Westside market is renting for upwards of $40 per square foot per year.

Kevin Dretzka, managing director in the Century City-based office of Eastdil Realty, a real estate investment banking firm, added that the prices are rising because of "a situation in which a great deal of capital is chasing a limited amount of space."

Just how much the market for office space has improved was illustrated by the bidding frenzy that occured when Fox Plaza was put up for sale, according to sources close to the negotiations. Prospective bidders were told they would need to submit a bid of at least $350 a foot to be considered, they said.

About 40 prospective buyers initially looked at Fox property, he said, but the field eventually narrowed to Davis. a domestic pension fund and a foreign investment fund.

Investors recognize that the rising rents and limited supply means "a significant upside," Dretzka said.

The combination of rising rents and well-heeled buyers, including many real estate investment trusts, has produced a number of huge office property sales in Los Angeles in recent months.

In April, the twin, 2.25 million-square-foot Century Plaza Towers in Century City sold for $480 million ($213 per square foot) to an investment fund managed by J.P. Morgan & Co. The seller was Delta Towers Joint Venture, a partnership between Prudential Insurance Co. and a banking group headed by Citicorp.