BEVERLY HILLS, Calif. -- Two Japanese groups announced plans Monday to make a major investment in a nearly-completed $200 million retail complex on the fabled Rodeo Drive shopping area in Beverly Hills.
The two groups -- Kowa Real Estate California Inc. and USA Sogo Inc. -- have agreed to buy a 40 percent interest in the Two Rodeo Drive project for an undisclosed price from AMEC-Power-Malkin Partners. The selling partnership consists of AMEC PLC of Great Britain, Power Corp. PLC of Ireland and Scott D. Malkin Interests Inc. of New York.
The 136,000-square-foot Two Rodeo project is expected to enlarge the retailing space on Rodeo -- a three-block stretch peppered with high-priced boutiques, jewelers and galleries with names like Chanel, Gucci and Sotheby's -- by nearly 60 percent when it opens in the fall.
The deal comes at a time when Rodeo Drive, the heart of Beverly Hills' 'Golden Triangle,' has maintained a strong attraction to free-spending shoppers for more than a decade. As a magnet for both the jet set and tourists, Rodeo Drive is the fourth most popular visitor destination in the Los Angeles area after Disneyland, Knott's Berry Farm and Universal Studios.
The announcement also said that Kowa and Sogo's ownership interest will be increased from 40 percent to more than 90 percent when the 23-store project debuts. That deal will involve the acquisition of the 40 percent share of Berisford Rodeo Property Development Ltd., which is a unit of Berisford International PLC of London, and an undisclosed portion of the 20 percent share developer Douglas Stitzel owns through Stitzel Properties Inc.
Stitzel estimated that the final purchase price by Kowa (a unit of Kowa Real Estate Investment Co. Ltd. of Tokyo) and Sogo (the real estate investment arm of Japanese department store chain Sogo Co. Ltd.) will be 'well in excess of $200 million.'
The Two Rodeo Drive project, across Wilshire Boulevard from the historic Beverly Wilshire Hotel, is 70 percent pre-leased, with some familiar high-end names -- Cartier, Cristian Dior, Charles Jourdan and Tiffany -- signed up as tenants. Long-term leases have annual rents that run as high as $225 per square foot.
The half-block project has a strong European flavor, with marble, bronze doors, limestone sidewalks, two fountains, copper roofs and even cobblestones on Via Rodeo, the crescent-shaped street that runs through the middle of the project and is closed to vehicles.
Stitzel has stressed that his use of Via Rodeo provides four street fronts, rather than two, by curving upward into the middle of the block. The idea is to fit four or five tenants into the same space where the traditional development would have two.
'The most valuable asset you can give a tenant is prime street footage,' Stitzel has said.
For many years, the site was occupied by a savings and loan building, a car dealership, a few small boutiques and a parking lot, but in 1987, Stitzel organized the financing to buy and develop the property in 1987. To help secure city approval for the project, he agreed to build a 600-space underground parking lot with two hours of free valet parking in an area that is chronically short of parking.