Qatar’s Latest US Investment Gives Santa Monica-Based REIT Value-Add Opportunity, Majority Share in Robust Brentwood Office Submarket
Douglas Emmett and its joint-venture partner, Qatar Investment Authority (QIA), acquired the 365,000-square-foot, multi-tenant Class A building at a price of $616 per square foot, the office REIT confirmed. The $225 million paid by the venture represents the same total price at which Hines acquired the property from Deutsche Asset & Wealth Management in November 2007.
The deal is also the latest venture in U.S. real estate by the Qatar sovereign wealth fund, which last year announced plans to invest $35 billion in North America over five years. The QIA and DEI venture closed the $1.34 billion purchase of four Westwood office towers from Blackstone Group LP earlier this year.
QIA also partnered with Brookfield Property Partners LP last October on Manhattan West, an $8.6 billion mixed-use project under construction in the far west side of New York City.
The property will be 77% leased, including known planned move-outs by tenants, significantly below the 97% average of Douglas Emmett’s Brentwood portfolio, providing an opportunity to add value through lease-up, the company said. DEI, which manages the JV, plans to retain a 20%-30% equity stake in the asset, with the remainder held by institutional partners.
DEI will manage the joint venture and expects to retain a 20% to 30% equity interest, with the remainder held by institutional partners. The venture used a new secured, non-recourse $90 million interest-only loan that matures in July 2019 to acquire the value-add asset.
With the purchase, Douglas Emmett’s office portfolio now totals 67 office properties totaling about 17.6 million square feet. The acquisition also increases Douglas Emmett’s stake in the Brentwood high-quality office market from 50% to about 61%. The company also owns 10 apartment communities totaling 3,336 units in Los Angeles and Honolulu, HI.
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