Zell to entertain offers for Tribune Tower, L.A. Times building

Sam Zell, the real estate mogul who runs the Tribune Company, put out this stunner this morning: he's willing entertain offers for the company's prize real estate holdings, which include the Tribune Tower in Chicago and the Times Mirror Square complex here in Los Angeles (pictured), which many know as the Los Angeles Times building.

Here's how Thomas Mulligan is covering the story for the L.A. Times: "Tribune Co. is putting two of its most historic properties -- the L.A. Times building and Tribune Tower in Chicago -- on the block."

This from an e-mail Sam sent to me personally, as well as every other Tribune employee: "...  we are in the process of asking a number of real estate firms to give us their best thinking on how we can generate more value from Tribune Tower in Chicago, and the Times Mirror Square complex in Los Angeles."

More: "We’ll be considering numerous options to maximize the value of these properties.  While a near-term transaction is possible, we’ll be focusing on opportunities that allow for some level of ongoing occupancy in both buildings for the mid-term (defined as five years), for farther out (15 years), and beyond.

"Most importantly, we are not rushing this process, and I can assure you we will not accept anything but full market value for these assets.  As we made clear on our first quarter earnings call, Tribune has sufficient liquidity to satisfy our principal amortization requirements through 2008, due to the proceeds we will realize from the Newsday transaction, and from our plans to create an asset-backed commercial paper program.

"Our request for proposals, which is being issued today, is likely to generate media attention and debate about what we should or should not do with the properties.  Both Tribune Tower and Times Mirror Square are iconic structures, deeply intertwined with the history of this company.  But, they are also both under-utilized, and as employee-owners, it’s in our best interests to maximize the value of all our assets."

Your thoughts? Comment? E-mail story tips to peter.viles@latimes.com.
Photo: Los Angeles Times

Comments

[Jacinto]

Memo to LA Times editorial staff:

Population of LA city (estim 2005): 3.8 million.

Population of LA county not part of LA city: 6.1 million.

This may be the moment for the Times to accept the fact that most people in the circulation area don’t care much about who owns historic buildings in LA city, nor what the LA mayor thinks, nor where LA Times headquarters may move to, nor…you get the picture.

LA Times should move to East LA, which is unincorporated county. It will still be close to the action but maybe it will learn how to be less city-centric. Same is true for local broadcast media. The Golden Gate Theater building is available, and proudly historic.

[eileen]

Poor Otis is probably spinning in his grave.

[Dixon Gayer]

Some 70 years ago (or thereabouts) when I taught high school journalism classes, we didn't have fancy computers. so we typed out stories using a special carbon paper that you smoothed down over a gelatinous bed that you could use to transfer the image onto a piece of paper and print maybe 20 copies—absolutely free. Sam Zell might look into that as a real price-buster.

We "published" our texts and reading materials on our dining room or kitchen tables—no offices or other fancy digs. Think of the savings, Sam!

The newsboy who delivered the paper worked for pocket change. Big whoop. You're onto something, Sam.

Keep plugging Sam, you can bring LA to it's knees. You're the man!!

[Valley Observer]

Peter, how many people work in the building? Are the large machines in there? How many of those people would be expected to be still there in let's say two years? (I'm wondering whether a strip mall would be large enough.)

[RG]

Let me understand the negative Zell sentiment here.....Sam Zell buys control of Tribune and the underlying assets, newspapers, some real estate, etc. And people have issues with him deciding to sell something he owns?

Regarding the Times, is Zell destroying the paper or is he just one of many owners who are struggling with the simple fact that newspapers, in their current form, are a business model that no longer works?

[Ragnar]

This thread is a nice diversion from the usual array of comments (median home prices are down, rent vs. buy, Countrywide sux, etc.) and is generating some of the more interesting posts that I have read on the blog over the past year+. It is a welcome addition to the LA Times Real Estate Blog.

There are a lot of factors built into the request for proposal. Sure, declining real estate prices are probably a large part of it, but I'm all for better utilization of prime downtown office space as a LA continues to grow and evolve. This whole process can be very forward-thinking and refreshing for the city.

[TrojanDLA]

I would LOVE to develop that Times building into a 3 star (out of 5) condo complex for middle management families looking for "affordable" housing without the commute. The large size ample parking, and proximity to metro rail suddenly makes this very viable on a per unit basis. Throw in day care facilities and a gym and I'm sure it would be a bigger hit than that behemoth "Grand Project" that starts at $3 million per unit.

This would be a GREAT study in urban "green" conversion with rooftop gardens and solar panel walls.

The truth is that it would not be a great commercial property, but the perfect residential space for the right developer.

[the problemwithcaring]

One of my earliest memories of being a Los Angeleno is coming back into town from vacation and seeing that LA Times sign on the budiling off 10 freeway...

Ahhh, to grow old in Los Angeles...not for the faint of heart.

[HulaGirl]

Journalism: A Full Circle Jerk

I once had a job editing medical and pharmaceutical papers for Indian doctors practicing medicine in the US.

Guess who edits them now?

I wanna be outsourced so I can get a sub prime loan, and buy a sub prime house in a sub prime part of L.A.

[Housing Bull Chorus]

ZELL!

What are you thinking?

Selling that Fantabulous building when you could convert it into 500sf lofts that are worth $1000psf?

It's simple. Empty useless space + granite countertops + stainless steel appliances = M-O-N-E-Y

And that $1000 psf...that's just now.

Don't sell them yet.

You need to wait a couple years and you'll easily get $2000 psf!

Trust me! People will be lined up around the block in order to buy lottery tickets for the mere chance to be rewarded with the opportunity to buy a Sam Zell (tm) condo!

Just make sure that after you have completed the conversions you absolutely, under no circumstances, rent them out during the obligatory "2 year hold and profit period".

If you do...you'll never get that "renter" smell out of them.

[Jeff S]

Hey I'm from NYC and grew up seeing the Pan Am building all the time. They sold the building and leased the little space they needed before finally going belly up (30 years ahead of the rest of the airline industry).

Anyway, I doubt very many people remember or care about the huge PAN AM on that building that was "historic", "iconic", "carved into the side of the building" as some of you describe.

Today it is the MET Life building and when they sell it, again it just won't matter. It's a building. End of story

[Nathan]

Bemused Chortle of the Day goes to Alex (June 25) who expresses that the Times Building should be torn down...oh, and put a museum in the new structure focusing on the history of LA (through the Times lens, etc).

Uh, so, um, what? Myopic Philistine I may be, but if any building needs to be protected and landmarked, it's the Times Bldng, Kaufmann's expression of interbellum Los Angeles (have you been inside its sublime lobby?!) which I might add would make a swell museum focusing on the history of LA (through the Times lens, etc). Besides, has anyone out there SEEN the buildings built in or around downtown in the last five years? Ok then. Probably not a good idea to tear something down, is it?

And Zell is selling this as a tear-down--as if he bought some 3000sf 1970s 4-unit in a slide area--he was counting on the carving on the side as his main excuse to tear it down. "But I CAN'T convert it! The carving has giant gorgeous restored NEON in it! I've already hired the wrecking balls! I'm a VICTIM!"