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REDWOOD CITY, CA-For upward of $825 million, Starwood Capital group is the new owner of Pacific Shores Center. The 1.7-million-sf, 11-building office park on San Francisco Bay and is approximately 90% leased. The 100-acre campus is Starwood’s first Bay Area office acquisition.

Pacific Shores Center was developed between 1999 and 2001 at a cost of $500 million. Amenities at Pacific Shores Center include a swimming pool, basketball court, baseball diamonds, a rock climbing wall, and a marina set to open in the summer. The sale price was not released by the parties involved, but local sources say the price came in between $825 million and $830 million.

The class A campus went on the market in September, a few months after seller Jay Paul Co. landed PDL Biopharma for more than 25% of the campus. Vacancy fell into the single digits recently when video game maker Eidos Interactive leased 62,000 sf, Starwood VP Sean Arnold tells GlobeSt.com.

More than one dozen offers were received for the property. Starwood and two others made it to the final round of bidding. Arnold says the property will throw off an above-market cash flow.

“There were a lot of [10-year] leases signed in 1999 and 2000, which was the top of the market,” Arnold says. “The way we looked at it, we’re buying an irreplaceable asset and a high-yield bond–the above-market rents. When those leases roll in five years or so, we think the market will be recovered.”

While the building is 90% leased, it is substantially less occupied. The lease with PDL commences in January and the lease with Eidos in the spring. A 50,000-sf lease with Broadvision commences later this month. Existing tenants include DreamWorks Animation; Threshold Pharmaceutical; Rudolph and Sletten; Symantec; and Openwave Systems.

About 200,000 sf remains to be leased. The current asking lease rate for space at Pacific Shores Center is around $2 per sf per month. When PDL signed its lease a few months back, the asking lease rate was $1.75. Without going into detail, Arnold says that in addition to the available space a large sublease is about to be signed.

Arnold says there are plenty of requirements out in the market and he is confident the project will see its share of the business. The mid-Peninsula location of Pacific Shores Center is attracting life sciences companies from South San Francisco and technology companies from Palo Alto and San Jose, he says.

Founded in 1991, Starwood has approximately $16-billion in real estate assets. In California, the company last year bought the Mammoth Mountain ski resort. In 2000, it built the Yerba Buena Lofts in San Francisco.

Jay Paul, which is currently developing Moffett Towers in Sunnyvale, is a developer that typically does not sell. However, the company built Pacific Shores with equity from Walton Street Partners of Chicago, which like many investment firms typically holds assets for between five to seven years and then must return capital to its investors.

Cornish & Carey and Eastdil Secured handled the disposition of Pacific Shores Center. Starwood had in-house representation.

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