Southland properties figure into Chicago acquisition.

JMB Realty sells asset management portfolio to Heitman

In a pending deal affecting ownership and operations at some significant Southland commercial properties, Chicago-based real estate investment management giant Heitman Financial Ltd. plans to acquire two major units affiliated with troubled Chicago property firm JMB Realty Corp.

Both Heitman and the JMB units invest capital and manage the acquired real estate assets on behalf of institutional investors, primarily pension funds-- and earn their keeps by collecting management fees.

Included in the huge real estate "asset management" portfolio about to change hands are JMB's four major office towers in Century City, along with office buildings in West L.A. and Woodland Hills. Also included in the deal are asset management responsibilities covering 6 million square feet of Southland industrial real estate and about 2,000 multi-family units.

JMB's property management/leasing affiliate -- which employs well-known local specialists, including the high-profile Century City team -- will become part of Heitman Financial's Heitman Properties Ltd. unit.

The planned acquisition by Heitman Financial would merge investment manager JMB Institutional Realty into a new entity to be known as Heitman/JMB Advisory Corp. Along with the merger of JMB's property management unit into Heitman Properties, the overall transaction would create an institutional advisory operation with more than $11.6 billion in assets under management. Heitman is one of 40 investment management affiliates of Boston's publicly held United Asset Management Corp.

Moving into the Heitman/JMB portfolio are the four Century City towers featuring about 2.2 million square feet of space: 1801 Century Park East, 1888 Century Park East, 10100 Santa Monica Blvd. and the new 1999 Avenue of the Stars. Heitman's existing local commercial portfolio includes The Wilshire Colonnade in the Mid-Wilshire district, Gateway Plaza and The McKesson Building in Pasadena, and Heitman Centre Beverly Hills -- home to Heitman's regional offices.

Not included are JMB's retail development and management operation -- which is a partner in the Valencia Town Center regional mall -- nor many other assets managed by various JMB units. JMB affiliate interests in downtown L.A.'s IBM Tower and the Cadillac Fairview portfolio -- which includes a partnership interest in downtown's Two California Plaza highrise -- are unaffected.

The Century City office towers are well leased, but are said to be burdened with heavy mortgage debt. "We have decades of experience and we'll handle it," commented Barry Schlesinger, Beverly Hills-based chairman and CEO of Heitman Properties Ltd. The huge deal "gives us the opportunity to solve those kinds of problems," he added.