A joint venture partnership of Sterling American Property, Inc. and Hines yesterday announced the acquisition of four Bay Area office properties from Equity Office for $329 million. This marks the 33rd acquisition for Sterling American Property Fund IV.
Richard Wilpon, Michael Katz and Thomas Osterman, Managing Directors of the Sterling American Funds, made the announcement, together with Hines Executive Vice President Jim Buie and Senior Vice President Paul Paradis.
The four properties, which contain six buildings are:
- 301 Howard Street, a 23-story, Class A office building located in the South Financial District and built in 1988. The 307,396-square-foot property is approximately 70% occupied.
- Foundry Square II, a 10-story, Class A office building located at 405 Howard Street in the South Financial District and built in 2002. The 502,424-square-foot property is approximately 59% occupied.
- Parkside Towers, a 398,460-square-foot, Class A office complex with two, 5-story buildings located at 1001-1051 East Hillside Boulevard in the Peninsula community of Foster City. Completed in 2001, the complex is 16% occupied.
- San Rafael Corporate Center, a 155,318-square-foot Class A office complex with two, 3-story buildings and 4.37 acres of land for potential development of an additional 230,000 square feet is located at 750 Lindaro and 781 Lincoln Avenues in the Marin County community of San Rafael. The property was completed in 2002 and is currently 38% occupied.
Mr. Wilpon said, "We are purchasing the portfolio with the potential for significant upside through the lease-up of vacant space. The properties on average are 47% leased, well below the market occupancy in their respective submarkets. Based on San Francisco's last five quarters of positive rental growth and absorption, we strongly believe we will rapidly improve the portfolio's occupancy."
Mr. Katz added, "We are not only bullish on San Francisco, but on the residential and commercial markets throughout the entire West Coast, particularly California."
Secured Capital represented EOP in the transaction, while Sterling American and Hines represented themselves.
In negotiating the transaction, Sterling American's Managing Directors coordinated the efforts of Tarak Patolia, SVP/Head of Acquisitions, Robert Watman, VP, Acquisitions and Robert Bergman, SVP/Asset Management.
Hines will assume the on-site property management responsibilities for the portfolio.
Mr. Paradis said, "We strongly believe the properties in the portfolio are highly competitive within their respective submarkets and are well positioned to benefit from the recent leasing activity throughout the Bay Area."