AGENDA REPORT
Meeting Date: September 12, 2022
Item Number:
To: Honorable Mayor & City Council
From: Logan Phillippo, Policy & Management Analyst
Jonathan Gernes, Management Analyst
Subject: APPROVAL OF AMENDMENT OF LEASE BY AND BETWEEN THE CITY OF BEVERLY HILLS AND UMRO REALTY CORP. DBA THE
AGENCY AT 331 FOOTHILL ROAD
Attachment: 1. Amendment of Lease
RECOMMENDATION
Staff recommends City Council approve the Amendment of Lease by and between the City of Beverly Hills and UMRO Realty Corp. DBA The Agency at 331 Foothill Road.
INTRODUCTION
The lease agreement with The Agency expires March 18, 2023, and the proposed amendment would extend the term of the lease for two years and expand the premises to include Suite 150.
DISCUSSION
The City entered into a ten-year office lease at 331 Foothill Road with The Agency for Suite 100. The initial lease provides the Tenant with the first right to negotiate an extension of the lease agreement for the existing premises. Suite 150 became available for lease following the former tenant’s (Participant Media) move-out on December 31, 2021.
The proposed Amendment of Lease provides the following key terms:
Expansion Premises: As of September 12, 2022, the Tenant’s leased premises includes Suite 150 at 331 Foothill Road;
Furniture, Fixtures and Equipment: The City shall deliver the expansion space with all fixtures and equipment in the current as-is condition; Term: The term has been extended to March 18, 2025;
D-8
Meeting Date: September 12, 2022
Expansion Premises Rent: In addition to the current rental rate, the Tenant shall pay $10,739.75 in base monthly base rent beginning February 1, 2023, with annual 3.5% increases beginning September 1, 2023 for the expansion space; Expansion Premises Rent Abatement: Rent shall be abated for the expansion space from September 12, 2022 through January 31, 2023; Initial Premises Rent: Rent starts at $50,337 per month beginning March 19, 2023 for Suite 100 and will increase by 3.5% annually beginning March 19, 2024; Initial Premises Rent Abatement: Rent shall be abated from March 19, 2023 through May 18, 2023;
Operating Expense: Tenant shall pay $355.47 monthly for increases to monthly operating expenses beginning September 1, 2023, with an increase on September 1, 2024;
Extension Option: Tenant shall have one option to extend the term for five years with rent to be adjusted to fair market rent;
Parking: Tenant may purchase up to an additional 9 unreserved monthly parking passes, for a total of up to 36 unreserved parking passes at the 9333 West 3rd Street parking structure; and
Security Deposit: The security deposit shall increase by $28,554.64.
FISCAL IMPACT
The proposed lease amendment will generate $1,412,829.81 in revenue from monthly base rent through the extended expiration date, March 18, 2025. Staff estimates the amendment will generate $8,944 in revenue for the Tenant’s share of building operating expense increases and $128,790 in parking revenue for parking passes for Tenant’s employees at the parking structure located adjacent to the leased premises through March 18, 2025.
The Tenant will be required to complete all of its planned improvements for the expansion space at the Tenant’s sole cost.
The City has a commission agreement with the brokerage Cushman and Wakefield of California, Inc., which was approved by the City of Beverly Hills in July 2021 (Agreement 281-21). The total commission payment for the expansion space is approximately $77,705.64, which will be paid in five installments over a four-year period with one-fifth due upon Lease execution and one-fifth due on each anniversary of the expansion space commencement date. Funding for the first commission payment is available as part of the Real Estate Management program budget for one-time professional consultant services (48012202-731200). Staff will budget for the remaining installments as part of the annual budget process in future years.
Gabriella Yap,
Deputy City Manager
Approved By
Attachment 1
B0785-0001\2710011v2.doc
AMENDMENT OF LEASE
THIS AMENDMENT OF LEASE (this “Amendment”) is dated as of September 12, 2022 (the “Effective Date”), and is entered into by and between the CITY OF BEVERLY HILLS (“Landlord”), and UMRO REALTY CORP., a California corporation (dba “The Agency”) (“Tenant”).
R E C I T A L S
A. Landlord and Tenant entered into that certain Office Lease dated September 11, 2012 (the “Lease”), pursuant to which City agreed to lease and demise to Tenant, and Tenant agreed to lease and accept from City, a portion of the first floor of the building at 331 Foothill Road (the “Building”) in the City of Beverly Hills, County of Los Angeles, State of California, as more particularly described in the Lease (the “Premises”).
B. Landlord and Tenant entered into a Memorandum of Lease dated September 11, 2012, which was recorded on September 28, 2012 as Document No. 20121467411 in the Official Records of Los Angeles County, California.
C. Landlord and Tenant desire to amend the Lease to add the space described on Exhibit “A” consisting of approximately 2,261 rentable square feet (but Landlord makes no representations or warranties, express or implied, as to the actual size of such space) (the “Expansion Premises”), known as Suite 150, to the Premises, and extend the term of the Lease, and amend certain other provisions of the Lease, all on the terms and conditions set forth in this Amendment.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant agree as follows:
1. Expansion Premises; Tenant Improvements. As of the Effective Date, the “Premises” as such term is used in the Lease shall include both the Premises and the Expansion Premises, and the terms of the Lease, as modified by this Amendment, shall apply to the Expansion Premises.
Landlord shall deliver exclusive possession of the Expansion Premises to Tenant promptly following the Effective Date.
Tenant accepts the Expansion Premises, and all personal property and fixtures therein, in their current “AS IS” condition, without representation or warranty, express or implied, and subject to the following.
Tenant shall comply with Section 12 of the Lease with respect to any improvements to the Expansion Premises.
The Premises have not been inspected by a Certified Access Specialist (CASp). A Certified Access Specialist (CASp) can inspect the Premises and determine whether the Premises comply with all of the applicable construction-related accessibility standards under state law. Although DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
state law does not require a CASp inspection of the Premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the Premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant.
The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.
In that regard, the parties agree that in the event Tenant requests a CASp inspection, Tenant shall pay any such inspection fees and the cost of making any such repairs.
2. Extension of Term. The term of the Lease is hereby extended to March 18, 2025.
Sections 3(b) and (c) of the Lease are hereby deleted.
3. Increase in Security Deposit. Upon its execution and delivery of this Amendment, Tenant shall deliver to Landlord, for addition to the Security Deposit under the Lease, the sum of $28,554.64 (which shall be governed by the provisions of the Lease applicable to the Security Deposit).
4. Increase in Monthly Rent. The monthly fixed rent for the Premises shall be as follows:
Period Suite 150 Suite 100 Monthly Total
9/1/2022 to 1/31/2023 $0.00 $43,285.35 $43,285.35
2/1/2023 to 2/28/2023 $10,739.75 $43,285.35 $54,025.10
3/1/2023 to 3/31/2023 $10,739.75 $25,133.43 $35,873.18
4/1/2023 to 4/30/2023 $10,739.75 $0.00 $10,739.75
5/1/2024 to 5/31/2023 $10,739.75 $21,109.06 $31,848.81
6/1/2023 to 8/31/2023 $10,739.75 $50,337.00 $61,076.75
9/1/2023 to 2/29/2024 $11,115.64 $50,337.00 $61,452.64
3/1/2024 to 3/31/2024 $11,115.64 $51,075.82 $62,191.46
4/1/2024 to 8/31/2024 $11,115.64 $52,098.80 $63,214.44
9/1/2024 to 2/28/2024 $11,504.69 $52,098.80 $63,603.49
3/1/2024 to 3/18/2025 $6,680.14 $30,250.92 $36,931.06
5. Increase in Percentage Share; Fixed Monthly Payments for Operating Expenses.
Tenant’s Share in Section 1(e) is hereby increased to 16.19% (and Landlord and Tenant hereby stipulate and agree that the Premises contains 11,849 square feet as of September 1, 2022) and the Base Year (Section 1(i)) shall be 2022.
Notwithstanding Sections 1(e) and 7 of the Lease, until Landlord notifies Tenant in writing not less than 12 months following the Effective Date that Sections 1(e) and 7 shall apply, Tenant shall instead pay a fixed amount as shown below as additional rent per calendar month (prorated for any partial calendar months) as Tenant’s Share of Operating Expenses and Tax Expenses:
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
Period Suite 150 Suite 100 Monthly Total
9/1/2023 to 8/31/2024 $67.83 $287.64 $355.47
9/1/2024 to 2/28/2025 $135.66 $575.28 $710.94
3/1/2025 to 3/18/2025 $78.77 $334.03 $412.80
6. Additional Parking Spaces. The number of passes for unreserved parking spaces described in Section 1(h) of the Lease is hereby increased to 36. The terms of the Lease shall govern additional parking spaces desired by Tenant.
7. Additional Permitted Use; Exclusivity. In addition to office uses, the Premises may be used for filming, subject to the terms of the Existing Sublease. During the extended Term and any extensions thereof, Landlord shall not lease space in the Building to another company whose primary business is residential real estate brokerage.
8. Existing Sublease. The Consent to Rights and Access Agreement (Sublease) dated September 21, 2021 executed by Landlord shall remain in effect.
9. Counterparts. This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, taken together, shall be deemed to be one and the same instrument. This Amendment must be executed through the e-signature application known as DocuSign, and such electronic signatures shall be considered binding upon the parties.
10. Five Year Tenant Extension Option. Tenant shall have the option to further extend the Term for five (5) years (the “Extension Term”) upon irrevocable written notice to Landlord given at least nine (9) months prior to the expiration of the Term. If the Term is so extended, the monthly fixed rent for the Extension Term will be Fair Market Rent (as hereafter defined), however, in no event shall monthly fixed rent decrease.
As used herein, the term “Fair Market Rent” shall mean the fair market rent for the Premises as of the commencement of the extension, determined as follows. After Tenant’s notice to Landlord exercising the extension, but prior to the date which is five (5) months prior to the scheduled expiration of the Term (without the extension), Landlord shall notify Tenant in writing of Landlord’s determination of Fair Market Rent. If Tenant objects to Landlord’s determination, Tenant shall, within fifteen (15) days after delivery of Landlord’s notice to Tenant, notify Landlord in writing of the specific reasons for Tenant’s disagreement, whereupon Landlord and Tenant shall confer and attempt to resolve such disagreement. If Landlord and Tenant are unable to agree on the Fair Market Rent within twenty (20) days following Tenant’s notice to Landlord, then the Fair Market Rent shall be determined by an independent realtor in the manner provided below, and until the Fair Market Rent determination is completed, Tenant shall continue to pay to Landlord the fixed monthly rent in effect immediately prior to the extension. After such fair market determination is completed, Tenant shall promptly make payment to Landlord for any underpayments owing for prior months or Landlord shall promptly reimburse Tenant for any overpayments owing for prior months, as the case may be.
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
The process for determining the Fair Market Rent in the event of an aforesaid unresolved disagreement shall be as follows. An independent realtor with no less than seven (7) years of experience representing landlords and tenants in office transactions in Los Angeles County, California chosen by Landlord shall, in good faith, determine the Fair Market Rent for the Premises based on premises in the City of Beverly Hills leased to office tenants (“First FMV Determination”), and Landlord shall forward the resulting fair market determination to Tenant.
If said First FMV Determination is unacceptable to Tenant, then Tenant shall so advise Landlord in writing within ten (10) business days after the First FMV Determination is delivered to Tenant, and Tenant shall then have the right to engage an independent realtor with no less than seven (7) years of experience representing landlords and tenants in office leasing transactions in Los Angeles County to similarly determine, in good faith, the Fair Market Rent for the Premises, and the resulting fair market determination shall be delivered to Landlord.
If the Second FMV Determination is unacceptable to Landlord, then Landlord shall so advise Tenant within ten (10) business days after receipt of the Second FMV Determination, and the first independent realtor and second independent realtor shall then together choose a third independent realtor with no less than seven (7) years of significant experience representing landlords and tenants in office leasing transactions in Los Angeles County who shall choose either the First FMV Determination or the Second FMV Determination as the Fair Market Rent.
The cost of the First FMV Determination shall be borne by Landlord. The cost of the Second FMV Determination shall be borne by Tenant. The cost of the third independent realtor shall be shared equally between Landlord and Tenant.
11. City Manager Authority. The City Manager of Landlord shall have the authority to execute this Amendment and any and all other documents contemplated by this Amendment.
12. Recordable Amendment of Memorandum of Lease. Upon its execution and delivery of this Amendment, Tenant shall concurrently execute and deliver a duly acknowledged recordable original counterpart of an Amendment to Memorandum of Lease in the form attached to this Amendment as Exhibit “B”.
13. Brokers. Each party represents to the other that no brokers other than CBRE, Inc. who represents Tenant and Cushman & Wakefield, Inc. who represents Landlord, have been involved with this Amendment. Landlord shall be responsible for the payment of any commission to Landlord’s broker pursuant to a separate written agreement between Landlord and such broker.
Landlord shall defend, indemnify and hold Tenant harmless from any claims, costs, expenses or liabilities for any compensation, commission or charges to realtors, brokers or agents claiming by, through or on behalf of Landlord, including Cushman & Wakefield, Inc., with respect to this Amendment and/or the negotiation hereof. Tenant shall defend, indemnify and hold Landlord harmless from any claims, costs, expenses or liabilities for any compensation, commission or charges to realtors, brokers or agents claiming by, through or on behalf of Tenant, with respect to this Amendment and/or the negotiation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Effective Date.
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
LANDLORD:
ATTEST:
____________________________
Huma Ahmed, City Clerk
CITY OF BEVERLY HILLS
By:
Lili Bosse, Mayor
APPROVED AS TO FORM:
______________________________
Laurence S. Wiener, City Attorney
APPROVED AS TO CONTENT:
______________________________
George Chavez, City Manager
TENANT: UMRO REALTY CORP.
By:
Rainy Austin, President
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
EXHIBIT “A”
DESCRIPTION OF EXPANSION PREMISES
(Attached.)
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
100
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
EXHIBIT “B”
FORM OF AMENDMENT OF MEMORANDUM OF LEASE
(Attached.)
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
RECORDING REQUESTED BY, AND
WHEN RECORDED MAIL TO:
City of Beverly Hills
455 North Rexford Drive
Beverly Hills, California 90210
Attn: City Clerk
(Space Above Line For Recorder’s Use)
Exempt from Recording Fees under California Government Code 27383.
AMENDMENT OF MEMORANDUM OF LEASE
THIS AMENDMENT MEMORANDUM OF LEASE (this “Memorandum”) is dated as of September 12, 2022, and is entered into by and between the CITY OF BEVERLY HILLS (“Landlord”), and UMRO REALTY CORP., a California corporation (dba “The Agency”) (“Tenant”).
R E C I T A L S
A. Landlord and Tenant entered into that certain Office Lease dated September 11, 2012 (the “Lease”), pursuant to which City agreed to lease and demise to Tenant, and Tenant agreed to lease and accept from City, a portion of the first floor of the building at 331 Foothill Road (the “Building”) in the City of Beverly Hills, County of Los Angeles, State of California, as more particularly described in the Lease (the “Premises”).
B. Landlord and Tenant entered into a Memorandum of Lease dated September 11, 2012, which was recorded on September 28, 2012 as Document No. 20121467411 in the Official Records of Los Angeles County, California.
C. Landlord and Tenant have entered in to an Amendment of Lease (“Amendment”) to expand the Premises, extend the term to March 18, 2025 and amend certain other provisions of the Lease, all on the terms and conditions set forth in this Amendment.
D. Landlord and Tenant desire to record this Amendment of Memorandum of Lease, as required under California law for municipal leases.
A G R E E M E N T
Landlord hereby leases and demises to Tenant, and Tenant hereby leases and accepts from Landlord, the Premises for the term and subject to the extension option(s) and termination option(s) set forth in the Lease, as amended by the Amendment.
The Premises are leased at the rental rates and upon the other terms and conditions set forth in the Lease as amended by the Amendment, which are incorporated herein by this reference.
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment of Memorandum of Lease.
LANDLORD: CITY OF BEVERLY HILLS
By:
George Chavez, City Manager
TENANT: UMRO REALTY CORP.
By:
Rainy Austin, President
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 B0785-0001\2710011v2.doc
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
DocuSign Envelope ID: 8E965974-2870-4AE9-BA98-0139B10BF507 Certificate Of Completion
Envelope Id: 8E96597428704AE9BA980139B10BF507 Status: Sent Subject: Amendment of Lease - UMRO Realty Corp. DBA The Agency Source Envelope:
Document Pages: 12 Signatures: 2 Envelope Originator:
Certificate Pages: 3 Initials: 0 Jonathan Gernes
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
455 N. Rexford Drive
Beverly Hills, CA 90210
[email protected]
IP Address: 104.175.193.255
Record Tracking
Status: Original
9/1/2022 6:01:11 PM
Holder: Jonathan Gernes
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Rainy Austin
[email protected]
President
Security Level: Email, Account Authentication
(None) Signature Adoption: Pre-selected Style
Using IP Address: 71.198.99.245
Sent: 9/2/2022 1:35:48 PM
Viewed: 9/2/2022 10:28:17 PM
Signed: 9/2/2022 10:28:57 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Bruce Galloway for
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 208.87.235.180
Sent: 9/2/2022 10:29:01 PM
Viewed: 9/3/2022 3:35:06 PM
Signed: 9/3/2022 3:35:14 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Logan Phillippo
[email protected]
Senior Management Analyst
City of Beverly Hills
Security Level: Email, Account Authentication
(None)
Sent: 9/3/2022 3:35:16 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
George Chavez
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Lili Bosse
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Signer Events Signature Timestamp
Huma Ahmed
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Alexa Delahooke
[email protected]
Security Level: Email, Account Authentication
(None)
Sent: 9/2/2022 1:35:46 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Jacob Bobek
[email protected]
Executive Vice President
Security Level: Email, Account Authentication
(None)
Sent: 9/2/2022 1:35:47 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Logan Phillippo
[email protected]
Senior Management Analyst
City of Beverly Hills
Security Level: Email, Account Authentication
(None)
Sent: 9/2/2022 1:35:46 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Pete Collins
[email protected]
Security Level: Email, Account Authentication
(None)
Sent: 9/2/2022 1:35:46 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Quinn Edwards
[email protected]
Associate
Security Level: Email, Account Authentication
(None)
Sent: 9/2/2022 1:35:45 PM
Viewed: 9/5/2022 1:33:00 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Carbon Copy Events Status Timestamp
Scott Menkus
[email protected]
Security Level: Email, Account Authentication
(None)
Sent: 9/2/2022 1:35:47 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Adrianne Tarazon
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Dorina Mohan
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Jackie Perez
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Michael Dunn
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 9/2/2022 1:35:47 PM
Payment Events Status Timestamps