Basin Street Selling 1M-SF Portfolio to EOP

PETALUMA, CA-Locally headquartered Basin Street Properties, the largest developer and manager of commercial properties in Sonoma, Marin and Napa counties, is in the process of selling 1.4 million sf to publicly traded Equity Office Properties Trust for about $263 million. The sale includes 36 office buildings in 10 developments in Sonoma and northern Marin counties. To date, EOP has acquired nine properties from Basin Street Properties totaling 514,606 sf for approximately $106 million. Those sales closed June 30. Basin Street president Matt White tells GlobeSt.com that EOP has gone hard for the remaining acquisitions, all of which include loan assumptions. Closings for those properties begin in two weeks and should conclude within 45 days. All of the buildings are owned by LLCs that include Basin Street and other investors, he says.The Basin Street portfolio houses about 250 tenants. The average occupancy in the portfolio is in the low 90% range. “There are no real major exposures,” White says. “Lease rollovers are staggered and spread out [in different buildings] and there’s nothing too large.”"Between what they already own and what they are picking up, they will certainly be–by head and shoulders and then some–the largest owner of office property in the North Bay,” White says. “You will not be able to go to Sonoma or Marin counties without talking to them.”EOP’s Bay Area SVP Mark Geisreiter tells GlobeSt.com the closed and pending transactions with Basin Street will give EOP a 40% market share of the class A office space in Marin County and a 33% market share of the class A space in the Sonoma County market. Prior to this transaction, EOP owned about 646,000 sf in the North Bay. It’s North Bay portfolio will crest the two-million-sf mark unpon conclusion of the Basin Street transaction.EOP’s existing North Bay stock includes one of the top property portfolios in southern Marin County, Geisreiter says. With the Basin Street’s northern Marin portfolio, Geisreiter says EOP is in a position to retain tenants who outgrow its southern Marin portfolio and are forced further north to find the extra space they need. For Basin Street, the transaction means it can focus on its core business–development, acquisition and redevelopment in Sonoma, Marin and Napa counties, says White. “They specialize in managing properties; that’s not what we specialize in,” says White. “They will do a much better job for the tenants.”White says the portfolio sale does not include Basin Street’s Downtown Petaluma portfolio, which consists of six buildings, or its six-building Napa portfolio. Basin Street also is holding onto 70 acres of developable land in Santa Rosa and Petaluma. EOP has obtained rights to purchase certain parcels after they are developed, says White.”Our business plan over the past five years with regard to office was to buy and own properties in all the submarkets of northern Marin and Sonoma counties, and we accomplished that about nine months ago,” says White. “We weren’t necessarily looking to sell but found ourselves in a unique place where the sum of the whole was worth more than the parts because of the properties and their locations. If (EOP) was going to try and build this portfolio through one-off acquisitions, it would have taken them 10 years.” The nine properties already sold are:

• Woodside Office Center (Novato) – one building, 89,031 sf
• Golden Gate Plaza (Novato) – two buildings, 114,634 sf
• McDowell Corporate Campus (Petaluma) – one building, 53,846 sf
• Oak Valley Business Center (Santa Rosa) – three building, 131,678 sf
• Airport Corporate Center/Brickway (Santa Rosa) – two building, 126,585 sf
• The pending property sales are:
• Redwood Business Park (Petaluma) – 13 buildings, 539,621 sf
• Parkpoint Business Center (Santa Rosa) – five buildings, 67,869 sf
• The Lakes (Santa Rosa) – five buildings, 136,754 sf
• Waterfall Towers (Santa Rosa) – three buildings, 90,627 sf
• Fountaingrove Executive Center (Santa Rosa) – two buildings, 79,428 sf
• BT Commercial and Cushman & Wakefield brokered the transaction.