Rialto Pays $49M for Suburban Campus

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SAN FRANCISCO—Miami-based Rialto Capital Management has purchased Walnut Creek Executive Park, located in San Francisco's East Bay. A global institutional investor and an institutional global investment manager sold the 423,458-square-foot office campus for $48.6 million. 

The Koll Co. acted as Rialto's advisor and joint venture partner. JP Morgan provided competitive floating-rate debt for the purchase.

Managing directors Michel Seifer and Rob Hielscher and VP Aaron Herter led the JLL capital markets team representing the seller while managing director John Manning and senior vice president Alex Witt arranged the financing on behalf of the buyer.

Herter tells GlobeSt.com that with San Francisco's record breaking recovery, investors are searching for yield in other parts of the Bay Area. “Parts of the East Bay are appealing for that exact reason,” he says. “Investors are able to generate good returns in burgeoning submarkets that are anchored by the regional economic engine that is San Francisco. Approximately 75% of the in-place tenants at Walnut Cree Executive Park are credit, which led to a very competitive bidding process.”

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According to Herter, “Through the sale of Walnut Creek Executive Park, the buyer and their partner were able to take advantage of a very attractive capital markets environment in the Bay Area. At the same time, Rialto was able to acquire a critical mass of office product in a tightening market at a significant discount to replacement cost. The high volume of long-standing credit tenants on the campus, combined with near-term upside potential via the lease-up of vacant space, led to a very competitive bidding process.”

Walnut Creek Executive Park is 75% occupied and features 12 buildings on 27 acres, a fully equipped fitness center, management office and is across the street from the future Safeway-anchored mixed-use development called the Orchards at Walnut Creek.

Owned by publicly-traded home builder Lennar Corp., Rialto bought the asset with its $1.3-billion Rialto Real Estate Fund II.

Mike Farley, director of Rialto, notes that “We like to buy assets in secondary markets like Walnut Creek's bourgeoning Shadelands submarket that are bolstered by strong regional economic engines like San Francisco. Walnut Creek Executive Park fits into the strategy of our second fund perfectly.”