HERTZ INVESTMENT INKS DEAL TO PURCHASE CALIFORNIAMART
Byline: Kristi Ellis
LOS ANGELES — Hertz Investment Group, owner of the California Jewelry Mart and other related downtown properties, has signed a contract, possibly as part of a conglomerate, to purchase the CaliforniaMart, WWD has learned.
According to industry sources, Equitable Life Assurance Co., which put the mart on the block in January with an estimated asking price of $100 million, is negotiating with the group for the purchase of the 3 million-square-foot property that is home to 1,200 apparel tenants.
The investment group is headed by Judah Hertz, who was reached on Wednesday and had no comment.
Mart tenants received estoppel agreements on Monday, which give the potential buyer permission to review the leases.
Carl H. Muhlstein, a broker with Cushman Realty Corp., which was retained by Equitable to spearhead the effort, would neither confirm nor deny reports about Hertz.
“We have had close to 100 inquiries on it, and we have received preemptive bids that were very attractive,” Muhlstein said.
Hertz has gone after historical landmarks in the past, according to Chris Runyen, an associate vice president with Grubb & Ellis, who also refused to confirm rumors about the negotiations.
About nine months ago, the Hertz group purchased a multi-tenant office building at 3345 Wilshire Boulevard, and 1 1/2 years ago, the group bought the historic Wiltern Building at 3780 Wilshire Boulevard.
“The CaliforniaMart is an expensive building, and that rules out a lot of buyers,” Runyen said. “It will have to be a conglomeration of buyers who purchase it.” Muhlstein noted that it is up to the buyer, which could be one group, on how to structure equity and debt.
As reported in these columns, Equitable put the mart on the block in January.
Susan Scheimann, president and chief executive officer of the mart, said in January that the sale — a part of Equitable’s ongoing strategy to scale back its real estate portfolio — could take 12 to 18 months.
In February, the mart reduced its staff by 15 percent, to 65 from 76 people. The cutbacks hit every area, including engineering, operations, marketing and leasing.
Equitable took control of the mart in 1994 in a foreclosure after the Morse family, the founders of the mart, defaulted on $250 million in loans.
Over the past six years, the insurance giant has invested millions to revitalize the aging building. In 1996, Equitable invested $19 million to renovate the lobby, fashion theater and common areas. The company also spent $5 million to $7 million a year on maintenance, according to Scheimann.