The 36-acre, seven-building development is located at the intersection of Central Expressway and San Tomas Expressway. The project is 90% leased and includes three single-story tilt-ups, a pair of two-story buildings and one three-story building.
NEC Electronics America Inc.'s headquarters leases 355,000 sf in three buildings or 57% of the project. JDS Uniphase Corporation leases one building for a total of 46,000 square feet or 7% of the project. Ray Marino of Mission West tells GlobeSt.com the vacancy consists of an empty two-story building comprising 63,000-sf.
Mission West financed the acquisition with a combination of debt, its line of credit and cash reserves. The company's first year cash return is 10%. The leveraged return on equity based on 90% debt will exceed 35%. The acquisition will increase the company's Funds from Operations (FFO) approximately $0.04 per share in 2003 and $0.06 per share in 2004.
In conjunction with the transaction, Blackstone says it also received $14.2 million as prepaid rent from Turnstone Systems, Inc., another tenant at the project, in exchange for reducing the remaining term of the tenant's lease. "Despite the deterioration in market conditions, we were able to recoup virtually all of our invested capital in the project through the combination of cash flow, the prepaid rent and the disposition proceeds," said Gary M. Sumers, Senior Managing Director at Blackstone.
Larry Blickman of BT Commercial brokered both sides of the transaction. Blickman did not return a call Wednesday seeking comment.
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