(To read more on the debt and equity markets, click here.)
SAN FRANCISCO-Pacific Coast Capital Partners has acquired a $17-million B note from Barclays Capital as part of an overall $120-million senior loan used to refinance an existing loan on Bayside I, a 16-builidng portfolio, and finance eight additional office/R&D buildings within the Bayside Technology Park in Fremont, CA. The total portfolio now consists of 17 office/R&D buildings comprising 1.13 million sf.
The borrowers, JER Partners and TMG Partners, acquired Bayside I, a 16 office/R&D portfolio, in September 2005 for a purchase price of $129 million. From that purchase, 13 office/R&D buildings were financed with an $81.5 million loan from Barclays Capital, from which PCCP purchased an $11.5 million B note. The remaining three buildings were unencumbered by the original senior loan. In March 2006, four of the Bayside I buildings were sold, reducing the portfolio to 581,906 sf with an occupancy of 45%.
The Bayside II portion of the loan includes the acquisition of five fully leased office/R&D buildings within the Bayside Technology Park totaling 551,551 sf that TMG and JER acquired earlier this month. At that time,(click here for previous story), TMG's director of acquisitions Matt Field told GlobeSt.com that the new acquisition would allow the company to increase its leverage and return additional equity to investors through a refinance.
The new loan finances those five buildings as well as the three unencumbered buildings from JER/TMG's Bayside I portfolio. PCCP's San Francisco based vice president Lauren Young says the loan provides PCCP the opportunity maintain a lending relationship with both a strong institutional borrower (JER) and an experienced local developer (TMG Partners).
"This new financing will allow the partnership to immediately leverage its existing portfolio with a similar loan structure that is already in place," says Young. "PCCP will benefit by increasing its commitment to the sizeable portfolio. Additionally, the new buildings will provide greater cash flow and will increase the portfolio's overall occupancy."
Bayside Technology Business Park is a 200-acre master-planned business park with about 2 million sf office, retail and hospitality uses. The borrowers' business plan is to lease the vacant space in the improving market and sell the buildings upon stabilization.
The Silicon Valley R&D market and the Fremont submarket currently have a vacancy rate of 20% and 22%, respectively. Young says that given the high quality of the buildings within the portfolio and their superior location within the Bayside Technology Business Park, the portfolio will be at a competitive advantage relative to other buildings in Fremont.
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