St. Regis up for sale amid labor, management upheaval.

IN the midst of contentious contract negotiations with its employees" union, the owner of Century City's St. Regis Hotel & Spa has put the property on the market, according to sources familiar with the listing.

Pivotal Group Inc. has hired Eastdil Realty to market the 297-room hotel at 2055 Avenue of the Stars, a 24-year-old property that several area hotel investors said could trade at upwards of $100 million.

Eastdil officials declined comment and Pivotal Group Chief Executive Francis Najafi couldn't be reached for comment.

If it reaches the $100 million threshold, which breaks down to $350,000 a room, the St. Regis would sell for 1"ar more than the $224,000-per-room Beny Alagem shelled out nine months ago for the nearby Beverly Hilton. It would also surpass the $112,000-per-room Chicago-based Walton Street Capital LLC put down for the Sheraton Universal in June 2003.

Pivotal bought the St. Regis and the neighboring 728-room Westin Century Plaza Hotel & Spa from Nippon Life Insurance Co. in 1999 for about $220 million. Rumors have circulated for some time that it wanted to sell the smaller of the properties.

In 2000, Pivotal spent nearly $40 million upgrading the hotels, with much of the money going to the St. Regis, Starwood Hotels & Resorts Worldwide Inc.'s luxury brand.

Richard Alter, president of Financial Capital Investment Co., which owns a majority stake in the Omni Hotel, said the St. Regis brand--popular on the East Coast--never caught on locally.

"I'm not surprised," he said, when told the hotel was for sale. "It appears to me that specific brand just doesn't have the critical mass to be successful in Los Angeles."

Alter said that while the St. Regis has beautiful interiors and guest rooms, it needs to be repositioned before it can be successful. "I love to visit there," he said, "but I don't think I would want to own it."

Alan X. Reay, president of Costa Mesa-based hotel consultancy and brokerage firm Atlas Hospitality Group, said high-end hotel operators looking for an entrance into the Los Angeles market would likely be interested in the property. "The question remains how expensive is it going to be to get out of the (management) agreement with Starwood," Reay said.

The offering comes as the hotel is embroiled in labor talks with its union, Unite HERE. Starwood, the hotel's operator, has been on the outs with union leaders nationally and if talks break down into a strike, it could make selling the property difficult for Pivotal Group.

"When you have uncertainty like a strike going on, most buyers might go through their due diligence but they aren't going to make a deal until there is a resolution," Reay said.

Further complicating the process is the departure of Tim Loughman, managing director of the St. Regis and Century Plaza hotels, who is leaving to work for Atlanta-based Noble Investment Group, which will base him in Winston-Salem, N.C.

Loughman denied that the hotel's labor troubles were behind his departure. He said it was "a quality of life decision" that will enable him to move closer to family members, make more use of his beach house in Beaufort, N.C., and place his children in better schools. In addition, he said the position comes with a better financial package.

Loughman has spent more than 20 years with Starwood and two years in his current position. "The tinting is a little bit off for everyone involved, but I'll be here at least though Oct. 15, if not longer," he said.

Promenade Sale

An investment group led by Kevin Green has sold 1360 Third Street Promenade in Santa Monica for $10.6 million, according to a source with knowledge of the transaction.

The 14,200-square-foot red brick building sits at the prominent intersection of the Promenade and Santa Monica Boulevard, but is encumbered by a below-market lease to the Italian restaurant Trastevere, the source said.

The building sold for about $750 a foot, below the $992 a toot 1218 Third Street Promenade sold for about a year ago, according to records with the Los Angeles County Tax Assessor's office.

Rents along the Promenade have skyrocketed in recent years to an average of about $10.50 a square foot.

Green, who declined comment, bought the building four years ago for about $7.5 million, according the Los Angeles County Tax Assessor records.

The buyer is affiliated with the family of Public Storage Inc. founder Bradley Wayne Hughes, the source said. Hughes could not be reached for comment.

Bob Safai and Chris Houge, principals with Centuly City-based Madison Partners, represented the seller and buyer, respectively. Both declined comment.

Westwood Law

Legal Research Network has inked an $8 million deal with Arden Realty Inc. to renew its lease for five more years at Westwood Center.

LRN added 10,000 square feet, bringing its total presence to 40,000 square feet in the now fully leased building at 1100 Glendon Ave.

"After the renovation was complete, the building filled up quickly," said Gayle Landes, Arden's senior portfolio manager. "We still have heavy interest in the building, even though we have no more space."

To connect its offices with the new space on the floor above, the company is proposing to build an internal stairwell. Landes said LRN's architects are trying to get approvals.

Other than adding the staircase, Landes said tenant improvements weren't very expensive. "The tenant improvements are very small because they're doing very little to existing space," she said.

LRN, a provider of legal compliance and ethics management in education services, was represented by Studley Corporate Managing Director Jeff Cowan. Through Cowan, LRN declined comment. Arden was represented internally.

Staff reporter Rebecca Flass contributed to this column. Staff reporter Andy Fixmer can be reached at [phone], ext. 263, or at [e-mail].