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EMERYVILLE, CA-Principal Real Estate Investors of Des Moines and locally based Harvest Properties have acquired the 315,000-sf Bay Center Offices complex here from TMG Partners for north of $120 million or $380 per sf, according to local sources familiar with the transaction.

Located adjacent to Interstate 80 on the eastern shore of San Francisco Bay, the 7.6-acre development includes two five-story buildings and three one-story buildings, all with glass and brick exteriors. Tenants include Novartis (Chiron), Jamba Juice (headquarters), MobiTV, Sendmail and Orb Networks. Occupancy is approximately 90%.

Bob Gilley and Steve Hermann of CB Richard Ellis had the disposition assignment. Neither TMG nor Principal would confirm the purchase; the brokers could not immediately be reached for comment.

Built in 1988, the property was originally the corporate headquarters for Sybase. After Sybase relocated its headquarters to Dublin in 2002, TMG Partners converted two of the three buildings into multi-tenant class A office buildings by adding lobbies and corridors and leased them up; the third building is occupied by Novartis (Chiron).

The local and institutional interest in acquiring the property was “huge,” said one local source. The ultimate sale price is reportedly more than three times what TMG paid for the property.

Principal’s regional director of acquisitions and dispositions Christopher Aust tells GlobeSt.com Bay Center Offices has both core and value-add components, the core being high-credit tenant Novartis’ long-term lease and the value-add being the available space in the multi-tenant buildings, which includes the top floor of one of the buildings and the second-highest floor in the other. Full-service market rents for comparable properties in the market range from $2.75 to $3.00 per sf, according to local sources.

As for why it partnered with Harvest, Aust says the company provided access to the deal that it otherwise wouldn’t have had and has a tremendous amount of local market knowledge. “The principals have been developing and operating properties in this market for years,” he says.

Principal’s stake in the greater Bay Area includes a little more than seven million sf of buildings. The portfolio includes about 4.2 million sf of industrial and two million sf of office, with the remainder being a mix of multifamily and retail assets.

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