AGENDA REPORT
Meeting Date: December 10, 2024
Item Number:
To: Honorable Mayor & City Council
From: Logan Phillippo, Real Property Development Manager Jonathan Gernes, Senior Management Analyst
Subject: BROKER LEASING COMMISSION AGREEMENT BY AND BETWEEN THE CITY OF BEVERLY HILLS AND CBRE, INC. FOR THE LEASE
OF TENANT SPACE AT 331 FOOTHILL ROAD
Attachments: 1. Broker Leasing Commission Agreement
RECOMMENDATION
Staff recommends City Council approve the Broker Leasing Commission Agreement by and between the City of Beverly Hills and CBRE, Inc. for the lease of the tenant space at 331 Foothill Road.
INTRODUCTION
The proposed agreement is for CBRE, Inc. to represent and assist the City with negotiating a proposed lease amendment with United Talent Agency, LLC (the “Tenant”) for office space at 331 Foothill Road. The Tenant already occupies approximately 41,562 rentable square feet in the building. The lease amendment negotiation includes, among several other terms, possible expansion into the vacant Suite 400, which was formerly leased to Google.
DISCUSSION
On February 6, 2024, City Council approved an agreement with brokerage Cushman & Wakefield to represent the City with marketing and leasing Suite 400. City practice is to exclude current tenants in the building from landlord brokerage agreements, giving the City the option to negotiate directly with an existing tenant in the building without incurring landlord broker commission fees. The City’s landlord brokerage agreements also include the option to request the landlord broker assist the City in negotiating with a current tenant in the building at a reduced commission.
Meeting Date: December 10, 2024
In this case, Cushman & Wakefield also represents the Tenant. While dual agency is commonplace and sometimes unavoidable in transactions, especially with large national brokerages that have many different teams (as with this particular situation), Staff recommends engaging a separate brokerage given the complexity and financial magnitude of the proposed lease amendment.
CBRE will represent the City specific to only the lease amendment negotiation with the Tenant, which may include expansion into Suite 400. Cushman & Wakefield will continue to represent the City for the marketing and leasing of Suite 400 for other prospective tenants not already in the building per the terms of the existing contract.
FISCAL IMPACT
There is no fiscal impact or request for funding at this time.
For the vacant Suite 400, the CBRE landlord broker commission will consist of 2% of the base/fixed rent for the first five years of the term and 1% of the base/fixed rent for the second five years. For any term longer than ten years, no commission will be paid.
For suites in the building already occupied the Tenant, the CBRE landlord broker commission will consist of 2% of the base/fixed rent for the first five years after November 1, 2032 (any rent negotiated after the term in the Tenant’s existing lease) and 1% of the based/fixed rent for the second five years after November 1, 2032.
The commission would be paid in two equal installments, with the first installment due upon the effective date of the lease amendment and the second installment paid on the anniversary of that date.
The lease amendment negotiation may also require the City to pay a commission to the Tenant’s broker, which is common practice. The terms and payment of any tenant broker commission, typically 4% of rent for the first five years and 2% of rent for the second five years, will be negotiated and presented to City Council concurrently with approval of the lease amendment.
Staff estimates the total commission for Suites 170, 200, 300 and 400 to be between approximately $130,000 and $470,000 for a lease extension and expansion. The final amount may be higher or lower and will depend on the base rent negotiated. Staff will present necessary budget actions, if any, to City Council concurrently with approval any future lease amendment.
Ryan Gohlich,
Assistant City Manager
Approved By
Attachment 1
BROKER LEASING COMMISSION AGREEMENT
This BROKER LEASING COMMISSION AGREEMENT is dated as of December 10, 2024 and is entered into by and between the CITY OF BEVERLY HILLS ("Landlord") and CBRE, INC. ("Broker") with respect to the leasing by Landlord of space at 331 Foothill Road in the City of Beverly Hills to United Talent Agency, LLC.
RECITALS
A. Landlord desires to engage Broker to obtain prospective tenants and to negotiate proposed "business" terms for a lease amendment with United Talent Agency, LLC for Suites 170, 200, 300 and 400 of the building at 331 Foothill Road in Beverly Hills, California. The current lease for Suites 170, 200 and 300 with United Talent Agency, LLC expires October 31, 2032.
B. Broker and Landlord desire that Broker be paid a leasing commission by Landlord only if Landlord actually enters into a lease amendment with United Talent Agency, LLC for Suites 170, 200, 300 and/or 400 and then only on the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals and other consideration, the sufficiency of which is hereby acknowledged, Landlord and Broker hereby agree as follows:
1. Term. The term of this Agreement shall commence on the date hereof and shall expire on December 31, 2025; however, Landlord's Executive Director or their designee may extend the term for one additional six (6) month period by written notice to Broker given prior to the expiration of the initial term.
2. Lease Commissions.
For Suite 400: 2% of base fixed rent for Suite 400 for the first five years after the rent commencement date for Suite 400, and 1% of the base fixed rent for Suite 400 for years 6-10 after the rent commencement date for Suite 400.
For Suites 170, 200 and 300: 2% of base fixed rent for Suites 170, 200 and 300 for the first five years after November 1, 2032, and 1% of the base fixed rent for Suites 170, 200 and 300 for years 6-10 after November 1, 2032.
3. Payment of Commission. Fifty percent (50%) of the commission for a lease amendment shall be paid promptly after the amendment is signed and delivered; the other fifty percent (50%)shall be paid one year after the date on which the amendment is signed and delivered.
No commission is payable for any options or extensions in the lease.
Landlord shall pay Broker a commission in accordance with this Agreement if within ninety (90) days after the expiration or termination of the Term (the “Post-Term”), the Docusign Envelope ID: 21292FC5-7944-4790-B4C6-F43307E297B4 -2-
B0785-0001\3043406v1.doc
Property is leased to, or negotiations continue, resume or commence leading to a lease of the Property during the Post Term or thereafter to any person or entity (including his/her/its successors, assigns or affiliates) with whom, during the Term, Broker either negotiated (either directly or through another broker or agent) or to whom the Property was submitted during the Term (“Existing Prospect”). Landlord agrees that Broker is authorized to continue negotiations with Existing Prospects. Broker will submit to Landlord a list of such Existing Prospects prior to the expiration of the Term, or if this Agreement is terminated earlier then no later than fifteen (15) business days following the termination of this Agreement.
4. Authority of Broker. Broker shall have no authority to bind Landlord, but shall attempt to negotiate basic business terms for a lease, considering market conditions for the Property, and that are acceptable to Landlord. Broker shall make clear to (and its broker, if any) that Landlord will not be bound unless and until its Board of Directors approves the lease in its sole and absolute discretion.
6. Insurance.
(a) Broker shall at all times during the term of this Agreement carry, maintain, and keep in full force and effect, insurance as follows:
(1) A policy or policies of Commercial General Liability Insurance, with limits of Two Million Dollars ($2,000,000) for each occurrence, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by Broker.
(2) A policy or policies of Commercial Automobile Liability Insurance covering bodily injury and property damage, with limits of One Million Dollars ($1,000,000) per occurrence combined single limit, covering any vehicle utilized by Broker in performing the Scope of Work required by this Agreement.
(3) Workers' compensation insurance as required by the State of California. (4) Professional Liability Insurance
A policy or policies of Professional Liability Insurance (errors and omissions) with limits of One Million Dollars ($1,000,000) per claim and in the aggregate. Further, Broker agrees to maintain in full force and effect such insurance for one year after performance of work under this Agreement is completed.
(b) The policy or polices required by this Agreement shall be issued by an insurer admitted in the State of California and with a rating of at least a A-;VII in the latest edition of Best's Insurance Guide.
(c) Broker agrees that if it does not keep the aforesaid insurance in full force and effect Landlord may either immediately terminate this Agreement.
Docusign Envelope ID: 21292FC5-7944-4790-B4C6-F43307E297B4 -3-
B0785-0001\3043406v1.doc
(d) At all times during the term of this Agreement, Broker shall maintain on file with the Secretary of Landlord a certificate or certificates of insurance in a form acceptable to the Landlord, attached hereto and incorporated herein, showing that the aforesaid policies are in effect in the required amounts. Broker shall, prior to commencement of work under this Agreement, file with the Secretary such certificate or certificates. The general liability insurance shall include the City of Beverly Hills as an additional insured to the extent of losses attributable to Broker’s negligence. Broker shall provide Landlord with thirty (30) days’ written notice prior to the cancellation or modification of any coverages required hereunder.
(e) The general liability and automobile liability insurance provided by Broker shall be primary to the extent of losses attributable to Broker’s negligence to any coverage available to Landlord. The policies of insurance required by this Agreement, with the exception of the Professional Liability, shall include provisions for waiver of subrogation.
7. Assignment. Broker may not assign its rights or obligations hereunder, in whole or in part, without the prior consent of Landlord, which consent may be given or withheld in Landlord's sole and absolute discretion.
8. Attorneys' Fees. If either party institutes legal action to enforce its rights under this Agreement, the prevailing party (as determined by the trier of fact) will be entitled to recover its reasonable attorneys' fees and costs from the other party.
9. Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement.
10. Entire Agreement. This Agreement constitutes the entire agreement between Landlord and Broker with respect to the subject matter hereof and may not be altered except by a written amendment executed by both Landlord and Broker.
11. Applicable Law. This Agreement shall be governed by the laws of the State of California.
12. Addresses for Notices. Notices hereunder shall be in writing, shall be addressed as follows, and shall be delivered by certified mail, return receipt requested (and deemed delivered on the date of delivery or refusal of acceptance shown on the return receipt):
Landlord: City of Beverly Hills
455 N. Rexford Drive
Beverly Hills, CA 90210
Attn: Logan Phillippo
Docusign Envelope ID: 21292FC5-7944-4790-B4C6-F43307E297B4 -4-
B0785-0001\3043406v1.doc
Broker: CBRE, Inc.
2000 Avenue of the Stars, Suite 800
Los Angeles, CA 90067
Attn: Jeff Pion
13. Time of Essence. Time is of the essence of every provision hereof in which time is a factor.
14. Broker Default. Landlord may terminate this Agreement upon a default by Broker which is not cured within ten (10) days after written notice from Landlord.
15. DocuSign. This Broker Leasing Commission Agreement may be executed by using DocuSign.
LANDLORD: BROKER:
CITY OF BEVERLY HILLS CBRE, INC.
By: ________________________________ By: _____________________________ Lester J. Friedman, Mayor Andrew Ratner, Managing Director
Attest:
____________________________________
Huma Ahmed, City Clerk
APPROVED AS TO FORM:
____________________________________
Laurence S. Wiener, City Attorney
APPROVED AS TO CONTENT:
____________________________________
Nancy Hunt-Coffey, City Manager
____________________________________
Sharon L’Heureux Dressel, Risk Manager
Docusign Envelope ID: 21292FC5-7944-4790-B4C6-F43307E297B4 Certificate Of Completion
Envelope Id: 21292FC579444790B4C6F43307E297B4 Status: Sent Subject: Complete with Docusign: 241203 - Broker Agreement 331 Foothill UTA.docx Source Envelope:
Document Pages: 4 Signatures: 3 Envelope Originator:
Certificate Pages: 2 Initials: 0 Jessica Garcia
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: 198.245.189.166
Record Tracking
Status: Original
12/4/2024 8:39:38 AM
Holder: Jessica Garcia
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Andrew Ratner
[email protected]
EMD
CBRE - Corporate
Security Level: Email, Account Authentication
(None)
Signature Adoption: Drawn on Device
Using IP Address: 4.37.57.162
Sent: 12/4/2024 8:42:28 AM
Viewed: 12/4/2024 9:54:41 AM
Signed: 12/4/2024 9:54:50 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Bruce W Galloway for
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 208.87.233.201
Sent: 12/4/2024 9:54:51 AM
Viewed: 12/4/2024 10:14:32 AM
Signed: 12/4/2024 10:14:54 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Sharon L'Heureux Dressel
[email protected]
Risk Manager
Sharon Dressel
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 198.245.189.166
Sent: 12/4/2024 10:14:55 AM
Viewed: 12/4/2024 10:40:05 AM
Signed: 12/4/2024 10:41:16 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Logan Phillippo
[email protected]
Real Property Development Manager
City of Beverly Hills
Security Level: Email, Account Authentication
(None)
Sent: 12/4/2024 10:41:18 AM
Viewed: 12/4/2024 10:41:48 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Nancy Hunt-Coffey
[email protected]
Security Level: Email, Account Authentication
(None)
Signer Events Signature Timestamp
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Lester J. Friedman
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
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
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 12/4/2024 8:42:28 AM
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