One of the biggest company's in Manhattan real estate, Brookfield Office Properties Inc., is about to become the largest landlord in downtown Los Angeles, controlling five of the 10 tallest skyscrapers in the city, according to reports.
With a staggering price tag of $430 million for some of the most prominent buildings on the city skyline, including Gas Company Tower and Wells Fargo Tower, the pending deal marks the end of one of Los Angeles' most celebrated office developers, MPG Office Trust.
According to the Los Angeles Times, with MPG's departure, Brookfield will become the dominant operator of prime office space in the city's financial core and play a major role in setting rents in downtown Los Angeles.
MPG's common-stock holders will receive $3.15 a share in cash, 21 percent more than the closing price yesterday, the Los Angeles-based real estate investment trust said in a statement Friday.
Brookfield also will begin a tender offer for MPG's preferred stock for $25 a share in cash. The deal is valued at $2.2 billion including debt and after cash proceeds from the planned sale of MPG's U.S. Bank Tower, said Wilkes Graham, a senior vice president at Compass Point Research & Trading LLC.
"It's the best outcome for downtown L.A. because we now have a well-capitalized ownership, which can at least reinvest in the buildings and in the community," Carl Muhlstein, a managing director at brokerage Jones Lang LaSalle Inc. told Bloomberg. "Whereas a nearly insolvent MPG never had enough money to even take care of day-to-day stuff."
Brookfield's contribution to DTLA Holdings will total about $550 million, consisting of equity in its existing downtown Los Angeles assets totaling $410 million and an additional investment of $140 million. The institutional investor partners have pledged $600 million.