The co-owners of Century Park, one of the largest and most prominent Class A office campuses on the West Coast, are close to a deal to restructure ownership of the $2.4 billion property.

Hines Real Estate Investment Trust Inc. is in talks to purchase a significant minority stake in the 3.2 million-square-foot Century City office park, home to Creative Artists Agency and the twin Century Plaza Towers, according to sources with knowledge of the deal.

Houston-based Hines, with the Hong Kong Monetary Authority in tow as an equity partner, is expected to purchase as much as a 49 percent interest in the property.

Under the deal being negotiated, current minority owner JP Morgan Asset Management is expected to increase its one-third stake to as much as 49 percent, effectively buying out the interests of funds associated with AT&T Inc. and General Motors Co. Sources with knowledge of the transaction said it was unclear who would retain the small remaining interest in the property.

In addition to the pair of 44-story towers at 2029 and 2049 Century Park East and CAA’s modern 12-story building at 2000 Avenue of the Stars, Century City’s “super block,” as it’s sometimes called, includes a four-acre park, the Annenberg Space for Photography, several cafes and restaurants as well as parking for more than 5,000.

JP Morgan hired New York commercial property brokerage Eastdil Secured Inc. to market the trophy asset for sale in August.

The deal being worked out now is expected to close late this summer. If the $2.4 billion valuation holds, it would be an unprecedented price for a commercial office property in Los Angeles. At about $744 a square foot, the expected value of the deal would come in far above that of the last big deal done in the area. In June, the nearby 21-story office building at 1888 Century Park East sold to downtown L.A. real estate investment firm CommonWealth Partners for $305 million, or about $604 a square foot.

In order to handle the massive transaction, JP Morgan is said to be enlisting the services of several title companies to work in tandem to insure the deal. Chicago Title Insurance Co. is expected to take the lead.

Triggering sales

Arty Maharajh, vice president of research in the downtown L.A. office of Cassidy Turley Inc., said it wouldn’t surprise him to see other Century City landlords such as Equity Office Partners or Topa Management put property on the market once the Century Park sale closes.

“We could see a deluge of more sales,” he said. “This could embolden or empower landlords to sell properties now that we’ve hit the high-water mark.”

Century Park’s twin towers were built in 1975 and designed by the late Japanese-American architect Minoru Yamasaki, who also designed the original World Trade Center towers in New York.

The towers were acquired by their present ownership in 1997 for $480 million, according to CoStar Group Inc.

The ownership group in the early 2000s hired Dallas developer Trammell Crow Co. to renovate the aging towers extensively and build the iconic 12-story Gensler-designed building CAA now occupies, which many affectionately refer to as the Death Star for its resemblance to the “Star Wars” icon. Construction was completed in 2007.

JP Morgan and its partners put Century Park on the market late last summer. Industry sources say AT&T and GM insisted JP Morgan publicly market the project in order to get full market value for their share rather than shop around quietly for a new equity partner.

Dozens of interested investors toured the property in the fall, including those representing sovereign funds from China, South Korea, Singapore and Abu Dhabi.

By December, the short list of best-and-final bids included offers from Hines, Tishman Speyer Properties, Worthe Real Estate Group and Douglas Emmett Inc. All four companies submitted bids for some fraction of ownership; only Tishman Speyer submitted an additional bid for the entire property, a source with knowledge of the process said.

Once the bids were in, sources said JP Morgan was slow to make a decision. In fact, by January, it was widely believed that JP Morgan had taken the property off the market after getting a read on its perceived value. Sources said the idea was that JP Morgan would buy out its partners to keep the property for itself, a notion that, until Hines closes escrow, might still be a possibility.

That left at least one interested party frustrated.

“They got everybody exercised and never pulled the trigger,” said one.

Since JP Morgan agreed to partner with Hines, which had submitted the highest bid for the property, sources said the two companies have been slow to structure a deal as they work out some of the fine points, including who will manage and lease the property. Hines handles leasing and building management services for several prominent L.A. properties, including the U.S. Bank Tower in downtown Los Angeles and the Howard Hughes Center in Marina del Rey. Downtown’s CBRE Group Inc. currently manages Century Park.

“For JP Morgan, a big part of their program is all the fees, and Hines is the same way,” one source said. “Behind the scenes, there’s been a battle between those two to figure out who will get property management fees, for example.”

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