Bentley Forbes Buys Warner Center Office Complex for $120 Million

A low-profile, family-owned real estate investment firm has purchased a Warner Center office complex for about $120 million in one of the San Fernando Valley’s largest office building transactions.

Bentley Forbes Group bought 21st Century Plaza--which serves as the headquarters of 21st Century Insurance--from an affiliate of Los Angeles-based Tishman International Cos.

The property features two 11-story office towers totaling about 517,000 square feet of office space and ranks as the Century City-based firm’s largest acquisition to date. The buildings are fully leased to 21st Century Insurance, which occupies the majority of the space, Regus Business Centres Corp. and Aetna Life Insurance Co.

“It has a great opportunity to grow [in value] and has a great location,” said Bentley Forbes founder and Chairman C. Frederick Wehba.

The Warner Center acquisition signals a shift in investment strategy for Bentley Forbes, which has amassed a real estate portfolio totaling more than $900 million.

Wehba, who has been involved in real estate investment and development for nearly 30 years, founded Bentley Forbes in 1993 with a focus on buying properties occupied by a single tenant who then leases the space back under long-term contracts.

Bentley Forbes is one of the relatively few specialists in the so-called sale lease-back field, and its portfolio includes a wide variety of properties, ranging froman insurance company headquarters in Cleveland to a Best Buy store in South Dakota and Isuzu Motor’s national sales office in Cerritos.

The deals permit sellers to cash in on their real estate equity and gives investors a relatively stable stream of income--depending on the stability of the tenant--without the hassle of leasing space or managing the property, which is handled by the occupant.

“You get some nice returns for a risk-free property,” said Orange County real estate investor Robert Campbell. “It’s a pretty lucrative business.”

Leasing a building to a single firm could result in a costly disaster if the tenant ran into financial trouble, forcing it to give up space or move out.

Specialists like Bentley Forbes mitigate the risk by dealing primarily with solid and established corporate tenants or by purchasing well-located properties that could be easily leased. The investment returns and risks are higher when dealing with smaller and less established tenants.

“We go after those corporate headquarters that are in pretty good locations,” Wehba said. “All we do is collect a check on a monthly basis.”

This kind of low-impact real estate investment suits Wehba and his son, company President C. Frederick Wehba II, fine. Instead of having to manage a huge property and leasing staff, the Wehbas have a staff of about 15 people. Investment and sale decisions are handled quickly by family members at weekly meetings.

“Being a smaller, family-run firm . . . gives us more flexibility and the ability to make a quick decision,” the younger Wehba said.

Despite a long-term focus on single-tenant properties, the Wehbas are shifting the contents of their portfolio to include more projects like 21st Century Plaza, which has multiple tenants. The change in part is in response to slower economic times, which have put more corporate tenants at risk.

“That’s why we are starting to look at high-quality, multiple tenant buildings so we can diversify a little bit,” the younger Wehba said.

Sale lease-back deals also are getting more scrutiny from lenders, said Paul Brindley, a commercial real estate mortgage broker at Holliday, Fenoglio, Fowler.

“They are hard to finance right now because corporate profits have gone down,” Brindley said.