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Douglas Emmett Pays HPP $89M for Encino Office

Los Angeles Office

Douglas Emmett has purchased First Financial, a 222k SF office building in Encino, from Hudson Pacific Properties for $89M.

Douglas Emmett Pays HPP $89M for Encino Office

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.

Douglas Emmett Pays HPP $89M for Encino Office

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.

Douglas Emmett Pays HPP $89M for Encino Office

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.