The Glendale campus of DreamWorks Animation SKG Inc. has been put on the market just two weeks after being sold for $185 million to the investment arm of SunTrust Banks Inc., an Atlanta bank holding company.
However, the animation studio won’t be affected, as it has a 20-year lease for the 14-acre, 400,000-square-foot property that comprises 10 buildings.
DreamWorks announced the sale-and-leaseback during a Feb. 24 call with analysts to discuss the struggling studio’s fourth quarter earnings. The deal was made as the company tries to right itself from financial setbacks.
Representatives of DreamWorks and SunTrust declined to comment on the sale. Los Angeles real estate brokerage CBRE Group Inc., the listing agent, also declined comment.
Fred B. Cordova, executive vice president at Kennedy Wilson Brokerage Group in Beverly Hills, said the relatively low purchase price the bank got for the property suggests the bank’s reason for purchasing the animation campus was to flip it.
“The deal was orchestrated up front, guaranteed. There is so much foreign capital out there and we are in accelerated market conditions,” he said, predicting that a Norwegian or German investment fund will buy the asset.
The manicured, Tuscan-style campus on Flower Street was built in 1997 and features a no-cost cafeteria, water fountains, koi ponds and walking paths. The sale price amounts to $467 a square foot, according to real estate data firm CoStar Group.
William Boyd, Jr., senior managing director of brokerage services at Charles Dunn Co. in Glendale, said he was surprised that DreamWorks would not have marketed the property and sold at a higher price – which suggested the sale was done under duress.
“DreamWorks could have achieved a better price for its campus – but it may have been more expedient for them to work with a friendly buyer,” he said.
DreamWorks has been hard hit financially in recent months following the release of several films that have failed to perform at the box office, forcing lay-offs and scuttling two merger opportunities.
The studio has a 20-year lease with DW Glendale CA Landlord LLC that starts at $13.2 million and increases 1.5 percent annually. DreamWorks has four five-year options after the initial period ends.
DW Glendale is a subsidiary of SunTrust Equity Funding LLC, the investment arm of SunTrust Banks, which has commercial banking operations in the Southern and Mid-Atlantic states.