FOSTER CITY, CA-Locally based Legacy Partners and Boston-based Rockpoint Group have landed loans totaling $122.4 million for the recapitalization of a West Coast office portfolio and the acquisition of a vacant office campus in the Silicon Valley in two separate financings funded by Los Angeles-based Mesa West Capital.
Legacy Fund II, a $457.9-million discretionary comingled investment fund of Legacy Partners and new joint venture partner Brookfield Asset Management, received $90 million in short-term first mortgage financing from Mesa West to recapitalize a six-property portfolio that included five commercial office buildings and one industrial property. The new non-recourse loan provided by Mesa West, along with additional capital provided by joint venture partner Brookfield, was used to purchase the portfolio's debt back at a discount and put new debt in place to provide more time and capital to continue to stabilize the properties.
The assets total approximately 915,000 square feet and include the Seattle Post Intelligencer Building in Downtown Seattle; Stanford Place III in Denver; San Mateo Plaza in San Mateo, CA; and Quadrant Willows Corporate Center Buildings C and E in Redmond, WA. The assets, which were acquired by the Legacy Fund II in 2007, have a collective occupancy rate of 70%.
Mesa West principal Steve Fried, who originated the financing, describes the properties as “all highly desirable assets, located in key markets that are benefiting from continued growth in the technology sector.” Fried cites “dramatically improving market fundamentals throughout the tech-heavy regions of Northern California, Washington and Colorado.” Submarkets such as Seattle and San Mateo will benefit from the migration of smaller tech companies looking for space, as large blocks of space are being absorbed by the major players, Fried added.
In a separate financing, Mesa West provided Rockpoint Group and Presidio Investments with a $32.4-million loan for the acquisition of Central Campus, a vacant 310,671-square-foot office and R&D campus in the City of Santa Clara. The complex is composed of a three-story office building and four one-story R&D buildings. Acquired by the Boston-based real estate investment firm through its Rockpoint Fund III in January 2011, Central Campus “provides an opportunity to finance a high-quality asset in a strengthening market at a low basis with strong sponsorship,” according to Mesa West principal Ronnie Gul.
Gul cites reports showing that tech employment and leasing activity in the Silicon Valley are the strongest in years. Central Campus “represents one of the few remaining blocks of space in excess of 200,000 square feet in Silicon Valley,” says Gul, who originated the loan. The sponsor invested a significant amount of equity at closing and plans to aggressively compete for those large tenants, says Gul.
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