REIT Douglas Emmett Drops $146M On Honolulu Apartments

By Andrew McIntyre

Law360, New York (January 2, 2015, 2:53 PM EST) -- Douglas Emmett Inc. has purchased a 468-unit apartment complex in Honolulu for $146 million, the Santa Monica, California-based real estate investment trust announced earlier this week.
For Douglas, which invests in properties in Los Angeles and Honolulu, the deal significantly expands the company’s multifamily footprint in the latter of those markets, according to the company's Dec. 30 announcement.

The property, Waena Apartments, is close to downtown Honolulu and comprises 24 buildings. The apartment complex recently received a $22 million renovation that included a new solar electric system and new community center.

The seller is San Francisco, California-based Carmel Partners Inc., which invests in multifamily properties in Hawaii and across the U.S. lower 48 states.

Douglas said it made the purchase using its line of credit and plans to seek financing on the property. The apartments, a mix of two-, three- and four-bedroom units, are 97 percent leased and sit on 12 acres.

In October, Douglas Emmett bought a two-building office campus in West Los Angeles for $75.3 million and also that month secured a $145 million term loan at 1.25 basis points above the London Interoffice Bank Rate.

In May 2013, Douglas paid $89 million to buy the Beverly Hills, California, headquarters of Hustler Magazine from Larry Flynt. The company said earlier this year it plans in 2015 to exercise its option to purchase land below one of its Hawaii office buildings.

Carmel Partners, founded in 1996, owns properties in Hawaii, California, New York, Colorado, Washington, D.C., Connecticut and Washington. The company’s two Hawaii properties, both on Oahu, are in Ewa Beach and Wahiawa.

In September, Carmel closed a $1.025 billion fund that included contributions from more than 50 investors. The company’s five funds have raised $3.16 billion since 2003.

"Fund V will seek the best risk-adjusted opportunities across multifamily renovation, development and debt investments in relatively supply-constrained, high barrier-to-entry markets in the United States," Carmel Partners CEO Ron Zeff said in a statement in September announcing the closing of the fund.

Carmel Partners couldn’t be immediately reached for comment Friday.

With the purchase, Douglas Emmett now owns 10 multifamily properties and a combined 3,336 units in Los Angeles and Honolulu. Douglas also owns 15.3 million square feet of office space — 61 total properties — in Los Angeles and Honolulu.

Douglas Emmett couldn’t be immediately reached for comment Friday.

Shares in Douglas Emmett were up more than 1 percent Friday afternoon.

Counsel information was not immediately available Friday.

--Additional reporting by Natalie Rodriguez. Editing by Philip Shea.

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