Douglas Emmett Pays HPP $89M for Encino Office
Douglas Emmett has purchased First Financial, a 222k SF office building in Encino, from Hudson Pacific Properties for $89M.
Hudson CEO Victor Coleman (who we snapped in Hollywood last year) says the firm was looking to let go of what it considers "non-strategic" assets to free up capital. Hudson and Douglas expect to close the deal this quarter, subject to assumption of an existing $43M loan. Hudson’s predecessor entity acquired the property upon completion of its IPO in June 2010.
DTZ VP of research Arty Majarajh (snapped hiking this weekend in Angeles national forest) tells Bisnow the price is bullish for a Valley asset, but that the area is just not part of HPP's core strategy. He estimates Encino office vacancy at a healthy 12.7%, compared to 14% Valley-wide. For Douglas Emmett, the deal makes perfect sense. The company already virtually owns that part of the Valley, with more than 3.5M SF in the Sherman Oaks-Encino area. Holdings include the Sherman Oaks Galleria and the 387k SF Valley Executive Tower. Arty tells us Douglas Emmett has been on a tear as the economy has recovered, looking to bolster its portfolio throughout LA.
In fact, Douglas Emmett spent about $61M in late 2013 for another large office in Encino. The 186k SF building at 16501 Ventura was picked up from Kennedy Wilson. First Financial in Encino is a six-story, multi-tenant office building with a four-level parking garage located at the corner of Ventura and Balboa boulevards. It's about 95% leased. Hudson says it will use proceeds from the deal as part of a 1031 exchange, potentially including assets from its $3.5B deal with Blackstone last month.