Hines Acquires Watergate Office Towers

EMERYVILLE, CA-Hines has acquired a 1.2-million-sf suburban office complex here named Watergate Office Towers from Equity Office Properties Trust. The 22.4-acre complex includes four mid-rise office buildings (Towers I, II, III and IV) and a freestanding Chevy’s restaurant. The development backs up to Interstate 80 on the eastern shores of the San Francisco Bay, a short ways from the San Francisco-Oakland Bay Bridge.

Hines acquired Towers I, II, III and a Chevy’s restaurant, all built in the 1970s, on behalf of National Office Partners Limited Partnership (NOP), the firm’s joint venture with the California Public Employees’ Retirement System. Tower IV, completed in 2001, was acquired by Hines Real Estate Investment Trust Inc. Overall occupancy is above 90%, according to Hines, which will manage and lease all of the buildings.

The purchase price for Tower IV was $144.9 million, according to SEC filings. The 16-story, 344,433-sf building is 100% leased to Oracle Corp. and Novartis. Oracle Corp. leases 87% of the building and Novartis leases the remainder. Both leases expire in 2013. The purchase price for the other three towers was not released by Hines and was not otherwise immediately available. Eastdil Secured represented EOPT. Hines used in-house representation.

Tower I, a 12-story, 217,054-sf (net rentable) building, was built in 1972 and is 79% leased to several tenants including LFR Levine Fricke and Sutter Visiting Nursing Association. Tower II, a 12-story, 229,040-sf building, was built in 1975 ad is 84% leased to Exponential Interactive and others. Tower III is a 16-story, 367,793-sf building that was completed in 1985 and is 90% leased to the likes of LECG; Gracenote Inc.; Zip Realty Inc.; and the law firm of Bishop, Barry, Howe, Haney & Ryder. The Chevy’s restaurant building contains 13,500 sf and was completed in 1973.

“The Bay Area markets are recovering, and we expect this investment will benefit from strong rent growth and tenant demand in the future,” Hines VP George Clever says in a prepared statement.