By Jorge Casuso

In what likely will be the largest residential real estate transaction in Santa Monica history, the looming Santa Monica Shores twin beachfront towers are expected to change hands next month for more than $90 million.

Douglas-Emmet & Co., which has been quietly buying up some of Santa Monica's most prominent buildings, is expected to close the deal on the 17-story, 532-unit complex in mid-May, according to a reliable source.

"The game's over," said a source familiar with the negotiations. "Douglas-Emmet is buying it."

According to the source, the buyer - which purchases and operates major properties on behalf of investors -- went "hard," which means the company will lose its deposit if it backs out of the deal. Sources said this virtually ensures the transaction will close on the huge rent-controlled apartments at 2720 Neilson Way in Ocean Park.

Larry Kates, one of the general partners selling the building, could not be reached for comment.

The transaction comes two years after Douglas-Emmet purchased Pacific Plaza Towers, 1431 Ocean Ave., a 288-unit apartment complex facing Palisades Park. The two purchases make Douglas-Emmet one of the largest residential property owners in the city.

In addition, the Westside-based realty company -- which also owns the white, 21-story office building at 100 Wilshire and the 12-story First Federal Building a few blocks away -- has been on a buying spree recently, purchasing mainly office complexes on the Westside.

The company's foray into residential properties comes after the state Legislature passed the 1996 Costa-Hawkins bill, which allows landlords to charge market rates for vacant rent-controlled units after Jan 1.

Since the state law passed three years ago, an estimated 100 vacant units have been kept off the market at Santa Monica Shores, according to tenants. A few units were rented but with the stipulation that the tenants move out by Jan.1.

The sales rumors began to circulate several months ago, when nearly two dozen units were renovated, but never rented, tenants said. Some of the renovation was halted in midstream. Elevator shafts were refurbished but new cabs never installed, and stained carpets leading to the newly-renovated units were never replaced.

Still, tenants weren't sure exactly what was happening. After all, owner Kates had long been known for his eccentricities. According to one longtime tenant, Kates once removed all the lobby furniture because it allowed tenants to "sit there and conspire.

"He's a brilliant guy, but he has a lot of Howard Hughes in him," said the tenant, who asked to remain anonymous. "Logic is not always easy to determine."

On Tuesday night, fliers were slipped under selected tenants' doors offering $20,000 if they vacated their one-bedroom apartments, $22,500 for those vacating units with a bedroom and den, and $25,000 for a two bedroom. The flier fueled speculation that the sale hinged on the number of available units.

A dash to cash in on the offer has begun, with tenants approaching the seller, according to both tenants and sources close to the negotiations.

"They (tenants) are jumping on the bandwagon," said the source familiar with the transaction. "Once the real estate deal closes, it's over. Emmet-Douglas never buys anyone out."

While the sum offered for Santa Monica Shores -- which was built as a federally funded low-income housing conplex -- is the highest ever paid for a residential building in Santa Monica, some experts say the offer is not unexpected.