Airport Center Portfolio

In early 2016, a partnership between the L&R Group of Companies (L&R) and Arch Anchor acquired Airport Center, a 750,000 RSF office and parking portfolio near LAX Airport.

The Airport Center project was a three-building office portfolio with two large parking garages, totaling 4,000 stalls.  The business plan was to sell off the office buildings and retain the parking garages as part of L&R’s long term LAX growth strategy (L&R is among the largest privately owned parking companies nationally through their WallyPark & Joe’s Parking brands).

The partnership recognized one of the highest and best uses for the office buildings were for them to be redeveloped into hotels based on their immediate proximity to LAX Airport, where hotels enjoy among the highest ADRs in Los Angeles.

To properly execute this, the partnership successfully relocated, terminated, or otherwise vacated two of the three buildings. The third building, 5901 Century Blvd., benefited in absorbing nearly all the displaced tenants from the two buildings slated for hotels. This decision took 5901 Century’s occupancy from a meager 35% to nearly 70%.

Ultimately, 5901 Century building was sold as a value-add office building, but at a price substantially higher than originally underwritten. The two vacated buildings were sold to notable hospitality operators, who redeveloped them as Hilton and Hyatt branded hotels respectively. In each case, the exit values were significantly above the original underwriting based on the value created by the L&R/Arch Anchor partnership’s ability to directly manage and execute its stated business plan.

In total, the sale proceeds of the 3 office buildings generated proceeds equal to nearly half (50%) the original cost of the entire initial Airport Center portfolio, allowing the partnership to significantly lower its basis on the parking portion, which L&R presently owns and operates today as long-term cash flowing asset and a strategic part of its LAX Airport holdings.

TYPE: Office & Parking Portfolio

SIZE: 750,000 RSF (office), 4,000+ parking stalls (garage)

ACQUISITION VALUE: $77M

ACQUISITION DATE: January 2016

SALE DATE: April 2017