New York City-On Tuesday, the Real Estate Lenders Associationheld a networking breakfast at the Yale Club here. The event wascapped off by a presentation from Jordan Kaplan, president and CEOof Douglas Emmett, a Southern California-based REIT that is activein the commercial and multifamily property markets in Californiaand Hawaii.

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“There are a few trades coming in the next 60 days that willhelp to firm up pricing,” Kaplan told the crowd, alluding to thetrouble establishing value in today’s market. For its part, DouglasEmmett recently closed a deal on Wilshire Bundy Plaza in LosAngeles that ran around $360 per square foot and there were severalother trades in the area that closed at $400 a foot.

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“These are buildings with large tenants that are almost 100%occupied,” Kaplan said. “But, interestingly, there is a building onOlympic Boulevard with one-month leases that will probably also gofor $400 a square foot. This should help us get a feel for wherevalues settle.”

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Kaplan noted that in the 1970s and ’80s, most equity came fromfriends or big domestic life companies, while Wall Street dominatedthe most of the ’90s. “I never really left the US then,” he joked.“But the last decade has been dominated by foreign players.” Infact, 75% of the firm’s last fund was raised by foreign investors.“The US is really the gold standard when it comes to moving inmoney,” he observed.

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According to Kaplan, the top choices for overseas investors areNew York City; Washington, DC; Boston; Los Angeles; and SanFrancisco, with the first two cities grabbing the most money frominvestors’ pockets. But Kaplan noted that “there is a trend towardL.A. as investors look for the next frontier.” Outside of thesefive major metros, however, “equity is a desert,” he said.

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And speaking of L.A., Kaplan spent a good deal of time talkingabout the office market there, which he said went from a 25 millionsquare foot market to a 45 million square foot one in just five tosix years. “It positioned us perfectly to take on the recessionthat hit in the early ’90s,” he joked. As a result, most of thedecade was spent absorbing all of that space and, today, the marketis “extremely supply constrained.”

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Part of L.A.’s appeal is the port, which is the largest in theUS. “There is also a huge education component, entertainment,medical research, healthcare, tourism, engineering and tech hasmoved down from Northern California,” Kaplan said. In addition,there are very few large tenants, with the average running around20,000 square feet. “There are no real dominate tenants; everybodyis included.”

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As for Douglas Emmett’s portfolio, vacancy in 2006 and 2007 wasaround 4%, but that number deteriorated over the course of 2008.“We’ve had nine quarters of negative absorption,” Kaplan said. Butdon’t blame defaults. “Those are way down, but space reduction iscontinuing,” he continued. “Real rents, including concessions, areoff about 25% to 30% from peak levels. But we need a few quartersof positive absorption before rents increase.”

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Douglas Emmett is also bullish on buying. “There are good dealsto be had,” Kaplan related, adding that his company racked up 28million additional square feet during the recession.

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