Dreyfus pulls out of LA deal

Real Estate Alert, June 2, 2004

A partnership led by Louis Dreyfus Real Estate has backed out of a $144 million deal to buy the 646,000-square-foot Union Bank Plaza in downtown Los Angeles.

The group, which included an unidentified U.S. insurer, will lose a significant nonrefundable deposit. While details are unclear, the buzz is that the insurer was the party that decided not to proceed.

The transaction would have marked the first time that Dreyfus, the New York real estate arm of French commodity firm Louis Dreyfus, was to team up with the insurer. Previously, Dreyfus had partnered with Apollo Real Estate Advisors on its deals.

At the $229/sf price tag, the Dreyfus group's initial annual yield would have been 7%. The transaction would have been the first major acquisition by Dreyfus in about five years. The company had been concentrating on the development and leasing of its office properties, several of which were ultimately sold.

The owner of Union Bank Plaza, Walton Street Capital, will continue to market the property via Lehman Brothers. Walton Street acquired the building in 2002 for $110 million, or $170/sf, from local player Judah Hertz.

The 40-story property, at 445 South Figueroa Street, can be expanded to include residential or additional office space, subject to local approvals.

The building, which was constructed in 1968, is 95% occupied (92.5% excluding space available for sublease). The largest tenants--Union Bank of California and the law firm N0ssaman Guthner--lease about 400,000 sf in total through at least 2011.