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PLEASANT HILL, CA-Chicago-based fund manager Transwestern Investment Co. has sold Hookston Square, a 207,000-sf multi-tenant office complex here for $39.75 million. Griffin Capital of Los Angeles acquired the well-leased class A property on behalf of 30 tenant-in-common investors, most of whom were completing a 1031 tax-deferred exchange.

The two-building three-story complex was built in the early 1980s on a 9.5-acre parcel immediately east of Interstate-680. According to a mid-year report by Cornish & Carey Commercial, the North I-680 market, where the property is located, has been the strongest performing Bay Area submarket over the past decade. The current vacancy rate for class A buildings there is less than 12%.

Hookston Square is over 95% leased to 45 tenants, with no tenant leasing more than 10% of the space. The largest tenants include Pacific Gas & Electric, an investment-grade public utility; Great-West Life & Annuity, an investment grade insurance company, and; Best Buy Stores, which keeps a regional sales office in the building.

Griffin Capital president Kevin Shields tells GlobeSt.com that about 20% of the building rolls in the next 12 months, with some of those tenants currently paying below-market rents and others paying above-market rents. The weighted average in-place rent in the building is about $2.15 per sf per month, he says, which is right at the top of the current market. Cornish & Carey will continue to provide leasing services and Transwestern Commercial Services will continue to be the property manager, he says.

“Hookston Square has a consistently high occupancy percentage with a large number of tenants, which tempers tenant rollover exposure,” says Shields. “The building is well established in a growing, healthy, supply-constrained market – all of which fits hand-in-glove with the stability of cash flow and long term value our investors seek.”

Griffin Capital raised $17 million in equity from investors represented by several different broker-dealers and obtained $30.5 million of non-recourse, 10-year fixed-rate first mortgage debt from Archon Financial, LP priced with a coupon of 5.40%. Shields says $3 million of the loan was used to establish a cash reserve account to fund ongoing tenant improvements and leasing commissions.

The majority of the investors’ equity was placed by the following broker-dealers: 1031 Exchange Options of Walnut Creek, CA; Direct Capital Securities/Private Equity Group, based in Southern California; Omni Brokerage Inc. of Ogden, UT; and, Pacific West Securities of Renton, WA. Cornish & Carey brokered the sale.

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