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SAN JOSE-Publicly held Flextronics has sold and leased back its three-building office/R&D complex here in a transaction with Dividend Capital Total Realty Trust Inc., a Denver-based REIT. The total acquisition cost for the 177,750-sf complex was $21.1 million.
Located at 2241-2245 Lundy Ave., the property is known as Lundy Avenue Research Park. It consists of three buildings ranging in size from about 40,000 sf to about 74,000 sf. Flextronics leased back 100% of the complex as part of the transaction and will self-manage the property.
"The Silicon Valley industrial/R&D markets continue to show positive signs of improvement, as evidenced by six consecutive quarters of declining vacancy and positive absorption," says John Blumberg, chairman of Dividend Capital Total Realty Trust. "Lundy Avenue Research Park is a great fit for our portfolio, with a strong corporate customer in the form of Flextronics."
Dividend Capital Total Realty Trust invests in real estate and real estate securities. Flextronics is a technology manufacturing company that provides design, engineering, and manufacturing services to aerospace, automotive, computing, consumer digital, industrial, infrastructure, medical and mobile OEM customers.
Dividend Capital Total Realty acquired the property in a joint venture with Westcore Properties of San Diego. Westcore, a real estate investment company, is a 10% partner in the property, according to SEC filings.
Dividend Capital Total Realty says the purchase price for the park was $19.8 million, with the remainder spent on due diligence and other closing costs. The purchase price was funded with proceeds from Digital Capital's private equity offering and an equity contribution from Westcore.
No debt financing was used, according to a Dividend Capital SEC filing, but the joint venture is expected to enter into a $14-million loan agreement to recapture some of the equity invested in the deal. The terms of the loan have not yet been determined.
In addition to the total acquisition price, Dividend Capital says it paid $356,000—2% of the company's pro rata portion of the $19.8-million acquisition cost—to an advisor. The advisor also will receive an asset management fee consisting of 0.5% of the Company's pro rata portion of the aggregate cost (before non cash reserves and depreciation) of the property and 6.0% of Dividend Capital's pro rata portion of the aggregate monthly net operating income derived from the property.
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