Public, non-traded real estate investment trust KBS Strategic Opportunity REIT, Inc. (Opportunity REIT) recently sold a property for nearly twice its cost, according to a filing with the Securities and Exchange Commission.
In August 2011 Opportunity REIT acquired a 70 percent interest in the 1635 N. Cahuenga Building (N. Cahuenga) through a joint venture that bought the property for an initial purchase price of $7.3 million. Adding in capital expenditures, lease commissions, and acquisition fees plus expenses, its total cost was about $9.1 million.
Located in the Hollywood section of Los Angeles, California, the six-story office building contains 34,711 rentable square feet. Key tenants include Atlantic Records, Franchise Entertainment, and Edmonds Entertainment.
At the time of acquisition, the building was 39% occupied. According to a recent Loopnet posting, occupancy now stands at 78%.
Built in 1983, N. Cahuenga was renovated in 1997 and again in 2013. Improvements included enhancements to common space and tenant floors two and four.
“We always believed the best sale of The Cahuenga Media Tower would ultimately be to an owner/user, so we focused on leasing the first 5 floors to good tenants and prepping the top floor for a future buyer,” said Shep Wainwright, Senior Vice President of KBS. “It turns out our hypothesis was correct.”
The building offers tenants creative amenities such as elaborate interior designs, multiple executive lounges, a 21-seat film screening room, a recording studio, and VIP parking with a separate driveway designed to provide celebrities privacy from the paparazzi.
On March 11, 2015, Opportunity REIT and its JV partner sold the building to an unaffiliated purchaser for $16.4 million.
CBRE, Inc. assisted with the sale.