The $340-million budget for the Water Terrace includes funds to acquire, renovate and sell the condominiums, says Colony, which has financing of approximately $290 million for the acquisition from AIG Global Investment Group. The new owner plans to finance the remainder with $50 million of equity from its Colony Investors VI Fund.

Water Terrace, completed in 2003, is adjacent to the marina at Marina del Rey. Colony, which plans to rename the property as a part of a repositioning, expects the units to be available for reservation in early 2005, with many of them available for move-in by midyear. The property will join others the company has converted to condominiums, including New York's Mayfair Hotel, now known as 610 Park Ave.

The Water Terrace transaction is the latest in a series of high-profile transactions for Colony, which last year --along with the Blackstone Group-- sold the Savoy Group of London, including Claridge's, the Savoy, the Connaught and the Berkeley, for $1.4 billion. The firm also owns the Fukuoka Dome complex in Japan and owns and operates luxury, full-service apartments in Asia under the Oakwood brand. Its Sunrise Colony Co. develops golf-oriented, master-planned communities in the US.