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LOS ANGELES-The State of California has named CB Richard Ellis to sell a portfolio of 17 California state office buildings totaling 8.7 million square feet and valued at $2 billion in sale-leasebacks. The new CBRE contract follows action in June by Gov. Arnold Schwarzenegger, who directed the sale of the properties located in Los Angeles, Oakland Sacramento, San Francisco and Santa Rosa in order to raise more than $660 million in proceeds from the sales to offset cuts in the state budget.

CBRE’s contract is with the California Department of General Services (DGS), which evaluated proposals from the L.A.-based company and five other firms before choosing CBRE. The DGS says that each company was scored in multiple categories including history of sales over $20 million over the past seven years, sales of at least $7.5 million over the last 10 years, experience of the proposed sales team, an interview with each bidder’s sales team and the bidder’s proposal for its percentage of sales compensation.

The 11 properties that the state is selling range from the 97,000-square-foot Judge Joseph A. Rattigan Building in Santa Rosa to the two-million-square-foot LEED Gold-certified Capital Area East End Complex in Sacramento and the 24-story, 863,000-square-foot Elihu M. Harris Building in Downtown Oakland. The 11 buildings represent “the largest office portfolio available for sale in the nation currently,” according to Kevin Shannon, CBRE vice chairman, who is based in the company’s South Bay office in Torrance.

Shannon says that the offering “is ideally suited for what the majority of investment capital is seeking right now, which is stable, leased product. CBRE expects that the properties will attract tremendous domestic and international interest, he says.

The DGS plans to sell the office buildings during the first half of 2010 and then enter into long-term leases with the new owners. The state will continue to maintain nearly 100% occupancy in all the buildings.

Commenting on the deal in a prepared statement, the DGS says that the office buildings offer “a unique opportunity for investors in a market that normally offers similar properties with an average vacancy rate of up to 20% to 30%.” As a GlobeSt.com report in October pointed out, California is one of a number of states that have turned to sale-leasebacks of their properties lately to fill revenue shortfalls associated with the recession.

The DGS notes that commissions for commercial real estate sales range from approximately one-half of one percent for high-valued properties to as high as 4% for smaller-valued properties. “Through a very competitive process, all of the proposals received by the state were under 1% and the winning proposal was substantially less than one-half of 1%,” the DGS says.

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