DreamWorks Campus Sells for $290M

DreamWorks Campus Sells for $290M

CoStar - http://gateway.costar.com/home/news/184922?market=20

Griffin Capital Essential Asset REIT, Inc. has sold DreamWorks Animation's studios and headquarters campus in Glendale, CA for $290 million. 

Korea's Hana Asset Management teamed up with Los Angeles-based OceanWest Capital Partners on the acquisition of the five-building, 460,000-square-foot campus located at 812 - 1040 Flower St. in the Burbank submarket of Los Angeles County.

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The Tuscany-inspired campus features studio space, industrial storage and an on-site parking garage with almost 1,500 stalls. Built in 1997, it is professionally landscaped on 15 acres with olive trees, a large fountain and koi pond, man-made river, courtyards, a library, fitness center, screening room and other amenities.

Griffin originally acquired the DreamWorks campus in July 2015 for $215 million from Sun Trust Equity Funding LLC in a profit-sharing and lease-back deal that will continue to keep DreamWorks on the lot through 2035 under a triple-net lease. Sun Trust had itself just taken control of the property in February 2015 in a $185 million distress sale, according to CoStar data.

The new owners are planning a long-term hold on the asset, in part due to its strong in-place cash flow.

"We have seen strong interest by foreign capital for class A, long-term, net-leased assets on the West Coast," said Kevin Shannon, capital markets president with Newmark Knight Frank (NKF), which represented Griffin in the sale. "This is another example of Asian capital targeting Los Angles for direct investment."

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DreamWorks is a well-known animation studio responsible for several movie franchises including "Shrek," "Madagascar," "How to Train Your Dragon" and "Kung Fu Panda."

Officials at DreamWorks originally sold the property to SunTrust as a way to earn extra cash and get it through a tough financial period after a series of flops and setbacks took a toll on the company's bottom line. It also laid off a little more than 20 percent of its workforce and charged off roughly $290 million pre-tax and a nearly $60 million write-down following several box office flops including "Penguins of Madagascar" and "Mr. Peabody and Sherman," facing what seemed to be inevitable bankruptcy.

Just last year, Comcast Corp. acquired DreamWorks in a move that significantly strengthened the studio's financial stability. It was DreamWorks' improved financial state that reportedly led Griffin to sell the property.

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"DreamWorks Animation's headquarters and studio campus was a great investment, we are pleased by the opportunity to sell the property at a price substantially higher than at purchase," Louis Sohn, Griffin Capital's director of acquisitions, said in a statement. "The proceeds will allow us to make strategic acquisitions that provide higher yields to the REIT."

Griffin expects to use proceeds from the sale in a number of 1031 exchange acquisitions that, in aggregate, will be accretive to the REITs economic returns while providing additional geographic, economic and credit diversification, according to the statement.

Newmark's David Milestone and Brett Green arranged acquisition financing for the buyer. 

Kevin Shannon, Ken White and Laura Stumm at Newmark Knight Frank represented the seller in the latest sale. The buyers handled the deal in-house.

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*Shared by Jeff Vertun

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