Manulife is moving to offload the namesake TCW Tower in Downtown Los Angeles, proposing a sale to the Los Angeles Department of Water and Power for $92.5 million. At that price, the 35-story office high-rise would trade at roughly $129 per square foot, a sign of how far downtown office values have slid. The deal is not done yet, with a purchase-and-sale agreement still to be signed and City Council approval required. Manulife has flagged an estimated $10 million net loss on the transaction and says it plans to use the proceeds to make an early repayment on debt tied to its Manulife U.S. REIT. The tower has been partly empty for a while, with occupancy at about 46 percent as of late December after TCW shrank its footprint and shifted some operations elsewhere.
Deal Details Reported by Manulife
According to The Real Deal, Manulife is pitching the proposed sale as a balance-sheet clean-up for its U.S. REIT. The company intends to funnel net proceeds into an early repayment of Manulife US REIT’s outstanding loan and is bracing for an estimated net loss of about $10 million on the trade. The outlet notes that the roughly 719,000-square-foot property at 865 South Figueroa Street rises about 35 stories and reports that the sale “could close during the second quarter,” though it still depends on a signed purchase agreement and city approvals before anything is final.
Why LADWP Might Buy
Public agencies have shown they are willing to wade into Downtown’s troubled office market when price and civic needs line up. A recent example is Los Angeles County’s purchase of the Gas Company Tower, a marquee but distressed high-rise, a deal and its hefty retrofit challenges detailed by The Los Angeles Times. The Department of Water and Power, the city’s utility, currently lists its headquarters as the John Ferraro Building at 111 N. Hope Street on its own website (LADWP), so a move to TCW Tower would mark a major real estate play for the agency and potentially reshape its downtown footprint.
What It Means for DTLA Offices
The proposed price sits in line with other recent downtown trades at a time when vacancies and availability are still elevated, and values are resetting. The Real Deal cites CBRE figures to outline those vacancy and pricing trends. Yet even in a soft market, some tenants are still betting on downtown. Commercial Observer reported on Banc of California’s 11-year, 40,000-square-foot lease at the tower, which also came with naming rights. At the same time, the building has been wrestling with move-outs, as TCW’s downsizing and shift to City National Plaza in recent years were chronicled by trade press, including Bisnow.
Next Steps
The proposed sale can only advance once a purchase agreement is executed and the city’s approval process plays out, including review by the Los Angeles City Council. The timing will hinge on due diligence and how quickly the municipal machinery moves. If the deal clears those hurdles, ownership of a prominent downtown tower would shift into public hands, while Manulife would pocket proceeds it has already earmarked for near-term debt repayment tied to its U.S. REIT.
