The Real Deal Los Angeles

Douglas Emmett’s $1.3B deal closes, JV partner is Qatar Investment Authority

DEI now controls 74 percent of the Westwood Wilshire office corridor

March 02, 2016 04:00PM

  • Print
Dan Emmett, chairman of Douglas Emmett and the building at 1100 Glendon Avenue

Dan Emmett, chairman of Douglas Emmett, and the building at 1100 Glendon Avenue

Santa Monica-based REIT Douglas Emmett Inc.’s purchase of a 1.7 million-square-foot office portfolio from Blackstone Group closed yesterday for $1.34 billion. The real estate giant’s once-mysterious joint venture partner was announced to be Qatar Investment Authority, Qatar’s $300 billion sovereign wealth fund, according to a release from DEI.

In what was one of L.A.’s biggest office acquisitions in recent years, the partners purchased the four Westwood office buildings at 10960, 10940 and 10880 Wilshire Boulevard and 1100 Glendon Avenue for $777 a square foot.

The joint venture, which DEI will manage, has obtained a non-recourse $580 million interest-only loan with a seven-year term to fund 43 percent of the transaction. DEI plans to retain 20 to 30 percent of the equity in the joint venture, with the remaining interests being held by its partners, according to a company release.

The portfolio was 89 percent leased at the time of sale, according to SEC filings.

With the addition of the portfolio, DEI controls 74 percent of the Westwood Wilshire office corridor. DEI’s total commercial portfolio now consists of 66 office properties totaling roughly 17.2 million rentable square feet. This gives the REIT a lot of power to raise rents.

Leases at DEI properties were 12.8 percent higher in the fourth quarter than the expiring rent from the prior leases covering the same space, according to CoStar.

DEI also owns ten apartment communities in Los Angeles and Honolulu with a total of 3,336 units.

For QIA, the joint venture represents another step in its plans to invest $35 billion in North America over five years. It opened an office in New York last year for this purpose. It also purchased the $8.6 billion Manhattan West mixed-use development last year in a joint venture with Brookfield Property Partners.  – Hannah Miet