Union Trust sale nears completion

By Ron DaParma
TRIBUNE-REVIEW
Saturday, January 26, 2008

An investment group led by executives of the Mika Realty Group in Los Angeles is expected to complete the purchase of the historic Union Trust Building next week.
“Things have gone smoothly, and there have been no snags,” said Jeffrey Ackerman, commercial real estate broker with CB Richard Ellis/Pittsburgh, who has been marketing the 11-story, 800,000-square-foot structure on Grant Street since last year.

The Tribune-Review reported in November that the building was under purchase agreement to the group that includes Michael Kamen, founder of privately held Mika, and a business associate, Gerson Fox, also of Los Angeles.

A purchase price has not been disclosed, but the building is assessed at $30.75 million, according to Allegheny County records.

Ackerman is working on behalf of the building’s owner, Teal Rock 501 Grant Street LP, a partnership owned by Philadelphia-based Cigna Corp.
“We look at the Union Trust Building as a classic building that can’t be duplicated,” Rick Barreca, CEO of Mika Realty, told the Tribune-Review in November. Barreca also one of the investors in the deal.

A list of developers carried by a California business publication showed Mika as the 13th-largest developer in the Los Angeles area, with some 5.9 million square feet in commercial real estate developed.

“The buyers have hired an architectural firm to help design improvements for the building,” Ackerman said. The group has said it wants to upgrade the building without disturbing its historic character.

The building, which has been known as Two Mellon Bank Center, is widely regarded as one of the city’s most architecturally significant landmark buildings. It was designed in Flemish Gothic style by noted Pittsburgh architect F.J. Osterling and built in 1916 for industrialist Henry Clay Frick.

It has been nearly empty since Mellon Financial Corp. — now Bank of New York Mellon Corp. — moved its personnel out of the structure in May 2006.

A small number of mostly retail tenants remain on the first level, the largest being Lorrimer’s clothing store.

CB Richard Ellis will handle management of the building once the sale completed, Ackerman said.

Two of its brokers, Hugh “Herky” Pollock and Jeremy Kronman, already have been working on behalf of the buyers to pitch space there to potential tenants for first floor retail and the upper floor office space, Ackerman said.

“A number of large office users have looked at the building, and they also have some very exciting prospects for the retail,” said Ackerman, without disclosing names of companies involved.

“The office market really is very active right now,” said Kronman. He’s shown the building to numerous prospective tenants, in fact, “enough to fill up four times the available space,” he said.

“We have people looking for 50,000- to 200,000-square-foot blocks, and we haven’t really started our leasing campaign,” he said.

The national credit crunch that has had a major impact on the U.S. residential market hasn’t caused any problems with the Union Trust building deal, Ackerman said.

“The buyer has secured lender financing,” he said.

Securing financing was said to be a problem with a previous potential buyer, a New York investment group that included Houlihan-Parnes/iCap Realty Advisors of White Plains and J.J. Operating Corp. of New York City.

Ron DaParma can be reached at rdaparma@tribweb.com or 412-320-7907.