Douglas Emmett draws $300M on Sherman Oaks Galleria

Douglas Emmett has drawn a loan of $300 million on its Sherman Oaks Galleria, as almost half of the multi-billion dollar REIT’s available office space at the complex sits empty, The Real Deal has learned.

The Santa Monica-based landlord got the mortgage loan from MetLife in December to finance the almost 600,000-square-foot retail and office complex, according to documents filed with Los Angeles County.

Douglas Emmett bought the complex in 1997 for $51 million, and completed a $200 million renovation on the complex five years later. The publicly traded firm, with a market cap of around $6.5 billion, owns around 18.2 million square feet of commercial space and more than 4,300 apartment units in Southern California and Hawaii, according to its website.

The new financing replaces a $500 million loan provided by MetLife in 2016, records show. Douglas Emmett did not immediately respond to a request for comment.

Regal Cinemas became the anchor of the Sherman Oaks Galleria after taking over a lease from the shuttered Pacific Theaters last year. Regal, owned by Cineworld, is planning to spend $10 million to renovate the theater complex, putting in 4-D screens and a three-screen wraparound auditorium.

Among the larger tenants at the mall are Designer Shoe Warehouse, 24 Hour Fitness and restaurant chain P.F. Chang’s.

Douglas Emmett has been less successful on office tenants, like many other office landlords during the pandemic. Around 150,000 square feet of office space is currently available for lease at the mall, which has a 16-story adjacent office tower named for Comerica Bank, its first-floor tenant, according to LoopNet and the company’s website.

Around 18 percent of all office space across the east San Fernando Valley, where Sherman Oaks is, was vacant in the fourth quarter of last year, according to Newmark.

The Motion Picture Association of America and Los Angeles-based advertising agency The Refinery lease office space at the building as of December, records show.

Few retail complexes have scored refinancing deals during the pandemic, which battered the industry and left many storefronts empty. Lenders have flocked to grocery-anchored complexes, such as the Midtown Shopping Center in Mid-City. YAR Associates scored a $63 million refinancing deal from LoanCore Capital for the 217,000-square-foot complex in May.