Investment group Blackstone is buying a big minority stake in three Hollywood studios — Sunset Bronson, Sunset Gower and Sunset Las Palmas Studios — with 35 sound stages (1.2 million square feet) from owner Hudson Pacific Properties. The partners are planning to build more together in what appears to be an overall booming development market for studio sound stages.
Netflix is the portfolio’s largest tenant, leasing over 700,000 square feet, in addition to signing long-term deals for stages and production space, the partners, who have worked together on other projects in Los Angeles, Seattle and Vancouver, said Monday.
They didn’t give a purchase price but said the total value of the assets in the new joint venture’s portfolio is $1.65 billion, valuing Blackstone’s share at about $808 million. The deal is expected to close in the third quarter.
Hudson Pacific, a publicly traded, West Coast focused real estate investment trust, said Blackstone Property Partners will acquire 49% of the Sunset portfolio, which totals 2.2 million square feet including on site or adjacent office space. Hudson Pacific will retain 51% and continue to run day-to-day operations, leasing and development.
“Our latest joint venture with Blackstone unlocks a portion of the value we’ve created for our shareholders and provides us with significant capital to grow both our studio and office portfolios, including the build-out of additional development rights at our existing studios,” said Hudson Pacific chairman-CEO Victor Coleman.
Ken Caplan, Global Co-Head of Blackstone Real Estate, said its business is driven by “investing thematically in sectors with powerful secular tailwinds” and that Blackstone “looks forward to significantly growing this platform together for the long-term.” Expansion opportunities include approximately 1.1 million square feet of untapped development rights at Sunset Gower and Sunset Las Palmas, as well as purusing additional studio acquisitions in Los Angeles and other markets.
A large Los Angeles-based hedge fund, Commonwealth Asset Management, that’s specialized in real estate plays, recently teamed up with Blackhall Studios in Atlanta to expand there — in a state that’s a large and growing production hub — and build new facilities in Los Angeles and London.
The studio lots in the Blackstone transaction provide key infrastructure for TV, film and digital production and house content tenants in both traditional and streaming media. The 966,000 square feet of office properties include 6040 Sunset, ICON, CUE, EPIC and the soon-to-be-completed Harlow.
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