Douglas Emmett, QIA nab 9665 Wilshire for roughly $188M: sources

The aggressive partnership now said to be after SaMo’s Arboretum Courtyard

TRD LOS ANGELES /
Jun.June 08, 2017 12:00 PM
9665 Wilshire (LA Conservancy), Jordan Kaplan (Getty) and QIA’s Sheikh Abdullah bin Mohammad bin Saud Al Thani (Getty)

The partnership between Douglas Emmett and Qatar Investment Authority continues its manifest destiny in Los Angeles’ trophy office market.

The partnership purchased a 10-story office building at 9665 Wilshire in Beverly Hills from Blackstone Group for roughly $188 million, or $1,100 per square foot, sources told The Real Deal. The deal comes right on the heels of other buys from Blackstone’s portfolio, including 1299 Ocean Avenue and 429 Santa Monica Boulevard.

 DEI manages the joint venture with QIA, which is the sovereign wealth fund of Qatar, and puts in 20 percent of the equity for acquisitions, CIO Kevin Crummy said on an earnings call last month. Additional, unnamed partners are involved in the deals.

 Eastdil Secured brokered the sale of the 171,000-square-foot Class A building at 9665 Wilshire, which was developed in the 1970s by Robert Maguire. Eastdil could not be reached for comment. Blackstone and DEI did not return requests for comment.

The Beverly Hills building is roughly 85 percent occupied, CoStar shows. Its major tenants include Smith Barney, Wachovia Securities, RBC Dane Rauscher, and Sotheby’s International Realty.

 Unlike the partnership’s other recent acquisitions, the Wilshire building was not acquired via Blackstone’s $39 billion leveraged buyout of Equity Office Property Trust in 2007. A joint venture between Blackstone and Brookfield acquired the property from Trizec in 2006, property records show. Blackstone bought out Brookfield’s share of the building in 2011 and has managed it through its EOP subsidiary ever since.

 In DEI’s first-quarter earnings call, CEO Jordan Kaplan said the REIT would do everything it could to acquire all the L.A. properties Blackstone is shopping. DEI first teamed up with the QIA to buy Blackstone’s entire L.A. office portfolio in one go, but amended their deal when Blackstone decided to roll out the listings one at a time, he said. Their first buy was a $1.3 billion portfolio of Westwood properties in 2016.

“As that list of buildings has been coming out, it’s not a question of should we do it here or there, that’s our commitment to them,” Kaplan said. “Other landlords take note — get out of our way!”

The partnership is now said to be eyeing Blackstone’s two-building, 140,000-square-foot Arboretum Courtyard office complex at 2120-2150 Colorado Avenue in Santa Monica. With the purchases it had closed by the time of the earnings call, DEI controls more than 70 percent of Santa Monica’s office supply, Kaplan claimed on the call.

Diplomatic tensions between Qatar and its neighbors threaten to hamper the QIA’s ability to make global deals going forward, though sources guessed is it unlikely to impact the DEI joint venture. Saudi Arabia, the United Arab Emirates and two other countries cut off most diplomatic and economic ties to Qatar Sunday, citing the country’s ties with Iran and Islamist groups.

“The potential risks that Qatari investors face, including the QIA, are going to increase and new deals are probably going to become more difficult to complete and face greater scrutiny,” Sven Behrendt of political risk consultant GeoEconomica GmbH told Bloomberg.


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