Hollywood loses another big name as BMG moves to Beverly Hills.

In what's thought to be the biggest Beverly Hills office lease in more than three years, divisions of the big Bertelsmann Music Group record company are relocating much of their local operations - primarily from their longtime offices at the nine-story RCA/BMG Building on Sunset Boulevard in Hollywood.

The 75,500-square-foot lease consolidating BMG Music and other Bertelsmann affiliates at the troubled Wilshire Robertson Plaza, 8750 Wilshire Blvd., represents the latest of several prominent entertainment firms that have migrated southwestward out of Hollywood.

The 10-year lease valued at more than $17 million is also expected to help 8750 Wilshire Associates - the partnership that developed the 118,000-square-foot Wilshire Robertson Plaza - emerge from Chapter 11 bankruptcy with a reorganization plan in place.

The partnership headed by developer Paul Amir completed the three-story property in 1990, but the only leasing activity has been an 8,800-square-foot ground-floor Bank of America branch.

Bankruptcy sought

The development group petitioned for bankruptcy protection in November 1993 after BofA, as successor to construction lender Security Pacific Bank, endeavored to take the property back through foreclosure. BofA claimed the partnership owed the bank about $19.8 million as of late October 1993.

The lease transaction approved this month by U.S. Bankruptcy Judge Samuel Bufford expands and consolidates much of BMG's L.A. area operations at today's favorable lease rates. It specifies a rate of $1.90 per square foot monthly for 55,000 square feet, with the balance at $1.85. The tenant also gets one year's free rent on about 5,700 square feet on the ground floor.

The arrangement also has the tenant paying for its own interior office improvements - designed by Santa Monica architect Cosimo Pizulli - with ownership giving a credit against lease payments through a complex formula.

The arrangement includes a "non-disturbance and attornment agreement" among BofA, the tenant and the landlord that maintains the terms of the lease in the event of a foreclosure. BMG will also get a 15 percent share of the 8750 Wilshire partnership's interest in any gross sale proceeds in excess of $19 million.

BMG's real estate brokers - Julien J. Studley Inc.'s John Ghiselli and Mike Catalano - also noted that the deal includes building-top signage rights and an option to have the property formally renamed BMG Plaza. The lease also offers the tenant typical "first refusal" rights to expand within the building.

Discussions continue

The brokers also said they're uncertain which specific BMG divisions plan to occupy the new offices as soon as the build-out is complete. They wouldn't discuss the remaining lease obligations on about 40,000 square feet at the RCA/BMG Building, but other sources said tenant and landlord are "in discussions" over the four years left on the commitment there.

But the Studley brokers did identify BMG Music, BMG Distribution, BMG Classics, RCA Records and Zoo Entertainment as the divisions now located at the RCA/BMG Building, 6363 Sunset Blvd.

BMG Publishing is now at 8370 Wilshire Blvd. in Beverly Hills, while affiliate Private Music's current address is 9014 Melrose Ave. in Los Angeles. Affiliate Arista Records has recently leased nearby offices in Beverly Hills and will stay put.

New York-based Bertelsmann Music Group is the music and entertainment arm of Munich-based worldwide media conglomerate Bertelsmann AG. Bertelsmann Music reported $3.1 billion in revenues for the fiscal year ended last June 30; the parent firm is an $11 billion-in-annual-revenues empire.

The big lease is also expected to help Amir's team demonstrate to the court that it will potentially have equity in the asset under prevailing real estate market conditions.

That should allow the partnership to get a reorganization plan confirmed and hold onto the Wilshire Robertson property as it emerges from bankruptcy with restructured bank financing.

"We're almost there," was Amir's response to a query about the deal's impact on the Chapter 11 case.

Mike Geller and Jeff Resnick of Westwood brokerage First Property Realty Corp. negotiated the deal on behalf of the 8750 partnership. As stipulated in Judge Bufford's order, that partnership will pay brokerage commissions by borrowing $735,000 from the Paul and Herta Amir Family Trust, a primary partner in the partnership.

All brokers involved in the lease negotiations - described by one as an "arm-wrestling, ass-kicking" endeavor - stressed that attorneys played key roles in closing the deal.

Ron Garber headed the team from Richman Lawrence Mann Greene Arbiter & Chaizever that represented the landlord. Tony Natsis led the Allen Matkins Leck Gamble & Mallory team representing the tenant.