Douglas Emmett is turning a Westwood office building to residences, the company announced during its second-quarter earnings call Wednesday.
The real estate investment trust reported that it plans to turn the office tower it purchased earlier in the year for $131 million from Tishman Speyer through a deed-in-lieu of foreclosure into apartments, per its second-quarter earnings release.
The 17-story, 247,000-square-foot office tower at 10900 Wilshire Boulevard called Murdock Plaza combined with a residential building it plans to construct on the same site will become a 320-apartment complex with ample amenities in Westwood. The conversion will occur over an undisclosed number of years as offices are vacated on a floor-by-floor basis. The first apartments could be ready in the next 18 months, the company said.
“Including the costs to acquire the property, convert the existing office tower and construct the new building, we expect this plan to increase the total project costs to approximately $200 million to $250 million,” Douglas Emmett said in the earnings release Tuesday.
In the first-quarter earnings release, the company reported that it expected the total project to cost $150 million to $200 million for the acquisition, construction of the apartment building on Ashton Avenue and upgrades to the existing tower. The firm estimated a timeframe of three to four years, but now, the ground-up development alone is estimated to take three years.
“We expect this conversion will not only enhance the value of 10900 Wilshire, but will also reduce office vacancy in the submarket,” Douglas Emmett CEO Jordan Kaplan said on the earnings call. Westwood office vacancies were at about 19 percent, according to a CBRE first-quarter market report.
Douglas Emmett is converting a 21-story building in Downtown Honolulu from offices to apartments.
Overall, Douglas Emmett’s revenues increased to $252 million in the second quarter compared to $246 million a year earlier due to an uptick in office and multifamily revenue. At the same time, losses escalated to $6 million. A year ago, the company reported $11 million in income.