X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

EMERYVILLE, CA-A 127,246-sf flex office building here has changed hands for $40.9 million. The building is 80% leased, most of it on a long-term basis by the federal government. The five-acre property is located at 1650 65th St., two miles north of the Oakland-Bay Bridge and a few blocks south of Berkeley Aquatic Park.The asset manager, Griffin Capital of Los Angeles, arranged the transaction for a group of 22 tenant-in-common investors, most of whom were completing 1031 exchanges. Griffin also owns a 5% stake in the property. The seller was a joint venture of two San Francisco firms–Rockwood Capital, an institutional real estate money manager, and TMG Partners, a real estate owner, developer and manager. TMG Partners will manage the property. The property was originally built in 1951 and substantially renovated in 2004. Its largest tenant, occupying 82,000 sf, is the federal Department of the Treasury. Another 20,000 sf is leased to Ex’Pressions Center for New Media, an expanding media arts college that keeps its main campus adjacent to the property, through 2014. The remaining 25,000 sf of space is vacant, but Griffin president Kevin Shields tells GlobeSt.com he expects Ex’Pressions to take down the space this fall and begin paying rent next spring. The current cap rate is about 6.5%. When the excess space is leased, the cap rate will jump to about 7.7%, he says.The planned hold is 10 years and there are two equally viable exit strategies for the property, Shields says. At the end of the projected holding period, Shields says Griffin can either renew the existing leases or entitle the land for high-density residential development and take advantage of the property’s unobstructed San Francisco Bay Area views. “Entitled residential land sells for about $60,000 per door and this property could hold up to 500 units,” he says. “That’s $30 million worth of dirt.”Shields says the 22 TIC investors put up a combined $13.5 million in equity and borrowed $27.4 million of non-recourse, 10-year fixed-rate first mortgage debt from JPMorgan Chase Bank at an interest rate of 5.42%. The investors were represented by numerous broker-dealers, Shields says. The substantial majority of the equity was placed by 1031 Exchange Options of Walnut Creek; Omni Brokerage Inc. of Salt Lake City; and Berthel Fisher Financial Services Inc. of Des Moines. Griffin Capital specializes in the acquisition, financing and ownership of institutional-quality property for its own account and through its Co-Ownership in Real Estate investment program serving the 1031 exchange market. The company currently owns and manages a portfolio of over 5.3 million sf of space located in 14 states.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.