Emmett's new fund, which it formed on Oct. 7, is slated for a four-year investment period. Company officials have discussed the formation of the fund in a number of the REIT's earnings conference calls, during which the REIT's president and CEO, Jordan Kaplan, has said that the new fund will become the primary acquisition vehicle for Emmett. In its prepared statement announcing the contribution of the six office buildings to the fund, Emmett said that the new undertaking "will be the company's exclusive investment vehicle, with limited exceptions." After the investment period of up to four years, it foresees "a value creation period of up to 10 years."

The new fund was formed with initial equity commitments of $300 million. Its investment strategy will be to look for acquisitions in Emmett's core submarkets "using the same disciplined underwriting and leverage principles that have governed acquisitions at Douglas Emmett for more than 20 years," the REIT said in its prepared statement.

In connection with contributing the office properties to the fund, Emmett also transferred a nonrecourse five-year secured term loan in the amount of $365 million to the fund. The loan, which it obtained in August, bears interest at a floating rate of Libor plus 165 basis points; interest rate swap contracts effectively fix the rate at 5.52% for the first four years.