This Week's Bay Area Deal Sheet
Miami-based Starwood Capital Group has reportedly defaulted on a $364.5M loan for a trio of downtown Oakland office buildings.
Starwood acquired the assets from CIM Group in 2019 for $494M. The lender, Deutsche Bank, has taken control of the three high-rises at 1901 Harrison, 2100 Franklin and 2101 Webster streets, according to the San Francisco Chronicle.
It is the latest blow for downtown Oakland, which was attempting a comeback in the years before the pandemic but now suffers from many of the same issues as neighboring San Francisco. Office vacancy in downtown Oakland reached 30.2% last year, the Chronicle reported, a far cry from the 8.8% mark when Starwood bought the properties.
LEASES
Intermolecular, a company that develops advanced materials for semiconductor devices and electronic applications, extended its long-term 146K SF lease in North San Jose with a joint venture of San Francisco-based Cannae Partners and equity partner Blue Vista Capital Management. Cushman & Wakefield represented the JV ownership of the property at 3011 N. First St.
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The city of San Francisco, which has been looking to divest some of its real estate holdings for months, is poised to sign a discounted lease for 157K SF of office space at 1455 Market St., the former home of tech giants Uber and Block.
According to the pending lease agreement with Hudson Pacific Properties, terms of which were published by the San Francisco Chronicle, the city will initially lease a portion of the seventh floor and the 12th, 13th, 15th and 17th floors for a term of 21 years. The base rent at the 22-story Mid-Market office tower will start at $40 per SF and increase to $72 per SF in the final year of the lease.
Fitness chain Solidcore is seeking retail space in San Francisco, according to the San Francisco Chronicle. The firm filed for special authorization from the city to run its chain stores, which the city calls “formula retail.” The two ground-floor locations in Solidcore’s crosshairs are 2K SF at 2175 Market St. and 2K SF at 3225 Fillmore St.
SALES
San Mateo-based apartment REIT Essex Property Trust acquired its joint venture partner’s 49.9% interest in the BEXAEW portfolio for $505M.
The portfolio includes four properties in California and Washington totaling 1,480 apartments.
The seller’s cap rate is approximately 5.25%, according to materials released by Essex.
“After incorporating additional economic benefits by fully integrating this portfolio into our operating platform, we estimate a 5.9% year-one yield,” Essex said in a press release.
