Harvesting the trophies

Much of the private equity real estate industry is rubbing its hands in glee at the distressed opportunities ahead. There are some players, however, that are faring less well. Broadway Partners has found itself to be one of them.

After spending much of the past few years snapping up portfolios of trophy buildings across the US, for record prices, the New York-based firm has resigned itself to a period of “harvesting”, according to founder and chief executive officer Scott Lawlor.

Following the sale of one of his key LA properties – the Citigroup Center at 444 Flower Street, better known as the reallife home of LA Law's fictional law firm McKenzie, Brackman, Chaney and Kuzak – Lawlor said he was living through one of the “most challenging investment market[s I have] seen in many decades”.

The Citigroup Center has been one case in point. Originally built in 1979, it was sold to Boston's Beacon Capital in 2003 for $170 million, before being sold to Broadway as part of a $3.3 billion, 10-office property portfolio, that also included the John Hancock Tower in Chicago and Universal Plaza in Universal City. The portfolio was purchased through Broadway's $590 million value-add office fund.

Last month, Broadway sold the property to investment and development firm Hines for around $280 million cementing its image as the latest poster boy of the overleveraged property boom, up there with the likes of Harry Macklowe. Broadway declined to comment.

Lawlor reportedly once told a reporter he measured the success of his firm largely on its ability to find new assets. The success of his firm now depends on its ability to sell them.