Ivanhoé Cambridge, Callahan Splurge in LA

Ivanhoé Cambridge and its partner Callahan Capital Properties have made their first purchase in Los Angeles, and for no small change.
Pac Mutual, LA

Canadian-based Ivanhoé Cambridge and its partner Callahan Capital Properties of Chicago have made their first purchase in Los Angeles, acquiring 100 percent interest in the PacMutual office property in the city’s downtown financial district for approximately $200 million.

Ivanhoé Cambridge, the global real estate investment and development arm of a Canadian pension manager, did not disclose the seller but The Los Angeles Times reported it was Rising Realty Partners. Commercial Property Executive reported in April 2012 that Rising Realty Partners and it financial partner, Mount Kellett Capital Management L.P., acquired the landmark three-building asset for $60 million. In April 2014, Mount Kellett sold its equity stake to Lionstone Group for an undisclosed price, according to the Los Angeles Business Journal.

Rising Realty and its equity partners spent about $25 million to renovate and reposition the Beaux Arts-style property to creative office space. Pac Mutual has 464,000 square feet of space and is comprised of three interconnected buildings constructed between 1908 and 1926. The property is 95 percent leased, including 21,000 square feet rented in April by a law firm, Hueston Hennigan.

“Downtown Los Angeles has seen a remarkable renewal and truly represents a modern ‘live-work-play’ sector of the city. PacMutual’s location, quality and appeal for the creative economy aligns remarkably with our long-term investment strategy in key cities in the United States,” Arthur Lloyd, executive vice president, office, North America, at Ivanhoé Cambridge, said in a prepared statement.

The property is located near the city’s 7th Street retail corridor, L.A. LIVE entertainment complex, STAPLES Center and mixed-use developments like The Bloc and Wilshire Grand.

“PacMutual represents not only a compelling investment in the form of very high-quality real estate in an increasingly prime location, but also represents the first Ivanhoé Cambridge/Callahan Capital Properties acquisition in Los Angeles to date,” Tim Callahan, CEO of Callahan Capital Properties, said in a prepared statement.

Callahan called Los Angeles “an important strategic market” and said the firms hoped to expand over time in the city.

Earlier this summer, Ivanhoé Cambridge and Callahan Capital Properties, announced they were   acquiring four office properties across the United States. The first two, which were in Boston and Denver, closed in early July and cost more than $225 million. The other two assets were in Chicago and New York City. Prices and closing dates were not available. The purchase of the U.S. office assets came after Ivanhoé Cambridge had been focusing on the U.K., China and Australia in the first half of 2015.

Ivanhoé Cambridge invests in high-quality properties and companies in select cities around the world. Through subsidiaries and partnerships, the Montreal-based firm has direct or indirect interests in over 160 million square feet of office, retail and logistics and in more than 23,000 multi-family units.

Callahan Capital Properties is a real estate private equity firm focused solely on acquisition and management of high-quality office properties in CBDs of major U.S. gateway cities. Ivanhoé Cambridge and Callahan Capital Properties own 12 million square feet of assets in New York, Boston, Chicago, Seattle, Denver and now, Los Angeles.