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Douglas Emmett Acquires Beverly Hills Office Property to Wrap Up Yearlong Buying Spree

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Douglas Emmett Acquires Beverly Hills Office Property to Wrap Up Yearlong Buying Spree



By: Karen Jordan and Jacquelyn Ryan

Santa Monica-based Douglas Emmett, Inc. (NYSE: DEI), one of the Westside’s largest landlords, bought the 146,300-square-foot office building at 9401 Wilshire Blvd. in the Golden Triangle of Beverly Hills for $143.6 million, or $981 per square foot.

In acquiring the property from Beverly Hills-based MGM Management Co., Douglas Emmett now owns more than 27% of the Class A office space in Beverly Hills. The REIT owns about 71% of the Class A office space in downtown Santa Monica, part of a total portfolio of 71 buildings comprising 18.4 million square feet.

The newest property, known as the Beverly Hills Financial Center, is at the corner of Wilshire and Canon, only steps from Spago, the Montage Beverly Hills and Rodeo Drive.

The shopping destination is listed as the second-most expensive location in the U.S., according to Cushman and Wakefield’s recent Main Streets Across the World Global Report.

The 9401 Wilshire office building is fully occupied by tenants that include law firm Ervin, Cohen Jessup LLP; Barrister Executive Suites and Bank of the West.

The seller, MGM Management Co., developed the building in 1972 and renovated it in 1999.

In total value, it’s the second-highest sale in Beverly Hills this year, following Douglas Emmett’s sale of 9665 Wilshire Blvd. in July to Blackstone Group LP for $177 million, or $1,034.40 per square foot, according to CoStar data.

“Their increased control of the West Los Angeles inventory, including in desirable markets like Beverly Hills and Santa Monica this year, will continue to give them augmented pricing power, especially for multi-tenant product as the vacancy rate continues to tighten,” said Kevin Shannon, Newmark Knight Frank president of West Coast Capital Markets.

Douglas Emmett took out an amortizing loan of about $32.3 million with a 4.55% interest rate that will mature in 2038.

The balance of the purchase was funded with cash and the issuing of approximately 2.6 million units in its operating partnership to the seller at an equivalent price of about $40.60.

Jonathan Larsen, Avison Young principal and managing director, described the sale as a “good long-term purchase” below $1,000 per square foot in the Golden Triangle.

“The building needs a complete renovation, but Douglas Emmett will turn it into a Class A asset,” said Larsen.

Earlier this year, Douglas Emmett acquired, in a joint venture with Qatar Investment Authority, two office buildings in downtown Santa Monica: 1299 Ocean Ave. and 429 Santa Monica Blvd., for a total of about $352.8 million.

It has also added apartment communities to its portfolio, with approximately 3,320 existing units and 850 in development between Los Angeles and Honolulu.

More Office Deals in the Works

This will not be the only office building to trade in Beverly Hills Golden Triangle in recent weeks.

Another high-profile property steps away, the Union Bank Building at 9460 Wilshire Blvd., is currently under contract to an as-yet unnamed buyer. Its purchase price is likely to exceed $130 million, according to sources.

The nine-story, nearly 100,000-square-foot Class A office building with 30,000 square feet of ground floor retail is in a prime location one block east of Rodeo Drive in the Beverly Hills Triangle.

The Beverly Union Company has owned the Union Bank of California building since 1978. It takes up a full city block and was built in 1959 and renovated in 1990, according to CoStar data.

Its other tenants include 3 Arts Entertainment and Universal Properties, Inc.

Please see CoStar COMPs #4087186 for more information on the Douglas Emmett transaction.


Source: Douglas Emmett Acquires Beverly Hills Office Property to Wrap Up Yearlong Buying Spree

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