Thomas steps up to buy Arco Plaza from Picerne Group. (Real Estate).

REAL estate investment company Thomas Properties Group LLC, backed by California State Teachers' Retirement System, is buying downtown's Arco Plaza for about $270 million.

The L.A.-based partnership beat out Commonwealth Partners LLC in a bid to buy the 2.6-million-square-foot property from Kenneth Picerne-owned Kings Capital LLC, according to downtown real estate sources.

Sherry Reser, spokeswoman for Ca1STRS, confirmed the acquisition, though she would not disclose the price. Officials from Thomas Properties and Eastdil Realty, which is marketing the property for Kings, did not return calls seeking comment. Mitch Rosenberg, chief executive Picerne Group, would not comment on the deal.

The sale will produce a windfall for Picerne, who holds an option to buy Arco Plaza for $255 million from Shuwa Investments Corp. Picerne will exercise the option before selling to Thomas, sources said.

At $270 million, the twin towers at 515 and 555 S. Flower St. would trade for about $104 a foot, far less than older downtown properties Union Bank Plaza and Figueroa Plaza, which sold last year at $170 a foot and $148 a foot, respectively. The two towers are more than 40 percent vacant and need extensive upgrades.

Shuwa bought the property, which was developed in 1971, for $650 million in 1986 but has been hard-pressed to make upgrades due to high debt and the drastic occupancy reduction of original anchor tenants Arco and Bank of America.

Kings had obtained the option by acquiring $900 million in debt on properties owned in Japan and the U.S. by Shuwa parent Shuwa Corp. last March and April.

Staff reporter Danny King can be reached at [phone] ext. 230, or at [e-mail].