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Douglas Emmett Scores $300M Refinance Of Sherman Oaks Galleria

The Sherman Oaks Galleria

Santa Monica-based landlord Douglas Emmett landed a $300M refinance on its Sherman Oaks Galleria, a roughly 600K SF retail and office property.

The loan, which was secured in December, came from MetLife, according to The Real Deal. The real estate investment trust's loan replaces a $500M loan provided by MetLife in 2016.

Douglas Emmett bought the Galleria in 1997, paying $51M. Five years later, it dropped $200M into renovating the property, according to TRD.

Though other retail centers have gotten refinances, they have largely been properties anchored by grocery stores, like the Ralphs-anchored Mid-City shopping center that got a $64M refinance in May. Exceptions have included the La Alameda shopping center in Southeast Los Angeles, which got a $40M refinance in June. 

The Galleria has about 150K SF of empty offices, representing almost half of the project's total office space, TRD said. The part of the San Fernando Valley that includes Sherman Oaks has a roughly 16% vacancy rate as of Q4 2021, according to Cushman & Wakefield. Portfolio-wide, Douglas Emmett said during its Q4 2021 earnings call that it had leased more office space in 2021 than in any prior year. 

The galleria's movie theater, an outpost of the ArcLight Cinemas chain that shuttered in 2021, has been taken over by Regal Cinemas. Regal plans to invest $10M in upgrades to the property, including adding 4D movie screens.

The retail portion of the mall has seen a bit of activity over the last two years. In 2020, tenants signed a total of 58K SF of lease renewals, according to a release about the Regal Cinemas takeover.