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QIA JV buys LA office portfolio from Blackstone for $1.3bn

Through a joint venture, Qatar Investment Authority has made its first purchase on the West Coast.

Qatar Investment Authority (QIA) is expanding its US reach with a joint venture purchase of four class A office buildings in Los Angeles from The Blackstone Group.

QIA has partnered with real estate investment trust Douglas Emmett to buy the 1.7 million square foot portfolio for $1.34 billion, the firms said Wednesday. The transaction is the first California purchase for the $300 billion sovereign wealth fund, which began investing in US real estate with the acquisition of four buildings in New York City in 2008, according to real estate data provider Real Capital Analytics (RCA). New York-based Blackstone, the world’s biggest real estate investment manager, purchased the buildings in 2006 and 2007, according to RCA.

Douglas Emmett, based in Santa Monica, California, will hold 20 to 30 percent of the equity in the joint venture, with the remaining interests held by QIA and other institutional partners, according to the announcement. The partners obtained a $580 million loan with a seven-year term from an undisclosed lender.

Last year, the Qatari sovereign wealth fund said it would invest $35 billion in North America across multiple asset classes over five years, although it did not provide any specifics for real estate. To assist with this expansion, QIA opened a New York office in September. Over the past 12 months, Qatar led Middle East countries sending capital to US real estate, purchasing 10 properties for a total of $5.4 billion, according to RCA.

Most of that capital was deployed in an October deal in New York City, when QIA bought a 44 percent stake in Brookfield Property Partners’ development on Manhattan’s far west side. The project, called Manhattan West, is a mixed-use development with five buildings, including office towers and luxury residential units. Manhattan West, valued at $8.6 billion, is slated for completion in 2019.