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Allen Matkins' Pete Roth is having a super busy quarter, and he let us in on some behind-the-scene details of some of Silicon Valley's biggest deals so far.  Pete (snapped with wife Laura and daughter Callie on her “family traditions” day at first grade) just repped Kilroy in its purchase this month of the 261k SF Chesapeake Terrace office project from Divco for $98M. For Pete, this year has been about branching out and getting knee deep in Silicon Valley. From 2010 to 2013, it was almost all about SoMa deals, like 333 Brannan (now leased to Dropbox) and the Salesforce Tower site. He repped Kilroy on the real estate side of the S.F. Flower Growers acquisition, a deal accomplished through a reverse triangular merger, a sign that more developers are creatively looking for land for future or near-term development.  Google and Apple's big appetite in Silicon Valley is so large it's making developers expand their horizons to supply other users' demand, hence the spike in Sunnyvale and San Jose activity. The four-building Chesapeake Terrace office park in Moffett Park has great tenant fundamentals, and it didn't hurt that Kilroy EVP Mike Sanford had in-depth familiarity with the project from his pre-Kilroy days.  Spencer Brown Kilroy Realty's view of the Bay Area is evidenced by John Kilroy recently moving his family from LA to S.F. Pete thinks there are a few reasons: John loves sailing the Bay and S.F.'s urban nature further energized him. He's both young at heart and creative and so responds to many of the same features that attract college grads, YPs and engineers to the Bay Area. His move means a top focus for the firm is S.F., where their future home for Salesforce at 350 Mission is coming along. Kilroy recently leased a 587k SF three-building Sunnyvale campus to LinkedIn.  Last week Pete repped Highridge Partners in their sale of a self-storage facility to Public Storage for $40M in Sunnyvale. Weeks before, he was hanging out with Iron Man, a skeleton and son Logan (right). The three-story 150k SF facility at 875 Arques contains 1,265 units. When you have a smart storage company like Public Storage wanting to expand its capacity in an area, he says, that's an indication there's a growing residential and commercial demand, together with strong fundamentals.  With increasing home values, homeowners want to maximize their usable square footage by moving storage offsite. Public Storage has multiple other locations in that area, he says, and when they like a market they like to expand their capacity and share big time. Their focus is buying best-in-class storage facilities, not '70s or '80s vintage product. Located off of Highway 101, the site was completed in 2007. |
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Cupertino Hotel Scores Financing The Hilton Garden Inn, a 164-room, limited-service hotel in Cupertino, just scored $32M in non-recourse financing. CBRE's John Nelson arranged the financing on behalf of the borrower, a partnership between Terracommercial and Heil and Associates. The fixed-rate, permanent financing was provided by a Wall Street lender and will be used to refinance the property. It was one of the most competitive financings he's ever seen given the top location of this asset, experience of the sponsors and management company, and extremely favorable financing metrics. The property at 10741 N Wolfe sits near Trend Micro, Cloud.com and Seagate Technology (and houses visitors of each). It's also located within blocks of the new Main Street Cupertino development and the Vallco Mall redevelopment.  Paramount Lodging Advisors' Scott Griemsmann, who sold the Hilton Garden Inn to this owner in 2007, gave us some more insight (here on date night with wife Debbie). While financing terms look to be pretty fantastic, he believes they remained really disciplined with their cash-out and are keeping pretty low leveage on the hotel. They acquired the hotel for $38M ($235k/key) in 2007. Now he thinks it could be valued as much as $55M-$60M based on current market conditions (or $350k/key, if not close to $400k/key). Considering the current capital markets, he thinks the owners could have pulled another 10-15%+ of equity out and completely cashed out of the property. This group is also building a Hampton Inn & Suites in Sunnyvale, just on the border of Cupertino.  A 180-room Residence Inn is also being built in Cupertino, with more on the books. He expects Cupertino to see a solid bump in demand when Apple's "massive spaceship office" is under construction--but Apple is also part of the problem with Cupertino, says Scott. They control a significant portion of the Cupertino office market, he says, and that tends to give them a significant amount of leverage on negotiating room rates when economic conditions turn for the worse. |
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Blackstone Sells 2nd Most Expensive Office Building?Blackstone has reached, although not completed, a deal to sell 1095 Sixth Avenue in Manhattan for $2.25B. Read more to learn about the buyer. |
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Who Should We
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Black Friday Strike?Employees at 1,600 Walmart locations are planning the biggest strike in company history on Black Friday. Keep reading to see why they're picketing. |
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