W3 Partners/AllianceBernstein Acquire Flex Tech Building in San Jose
SAN RAFAEL, CALIF. (January 17, 2013) W3 Partners, an institutional real estate investment manager and operating company, has acquired, on an off-market basis, a 64,336-square-foot, single-story flex-tech building in San Jose, Calif. from Prologis, in a joint venture with AllianceBernstein U.S. Real Estate Partners L.P. Built in 1982 and situated on just under 4.3 acres, the property is located at 3939 North First Street. The asset is currently vacant and undergoing improvements. W3 Partners will be the operating partner for 3939 North First Street and is looking to complete the market-ready improvements for the property and commence an aggressive lease-up program.
Diane Olmstead, co-founding partner of W3 Partners, noted that this acquisition is their first co-invest joint venture with AllianceBernstein U.S. Real Estate Partners L.P.
Olmstead said, “W3 is thrilled to have AllianceBernstein as a co-investment partner. The formation of this joint venture demonstrates W3’s current capitalization strategy whereby we consummate transactions using capital from our original partners, Hunt Realty Investments and Teacher Retirement System of Texas, which provides the competitive market advantage of certainty of close. After closing we reach out to joint venture partners looking to co-invest 80 to 95 percent of the equity. In 2013, W3 Partners expects to continue to develop relationships with other sources of co-investment capital. In particular, the firm is seeking co-investment partners for core-plus and value-add West Coast office and office/R&D properties on a deal by deal or programmatic basis.”
To underscore W3’s value-add strategy, Cliff Cummings, acquisitions officer at W3, noted, “We are embarking upon exterior and interior improvements at 3939 North First Street that will be attractive to today’s tenants looking for high quality office space in locations close to amenities.” He added that the property benefits from its superior location within walking distance of light rail service and new retail, restaurant, and hospitality amenities. North First Street is the main north-south artery in San Jose and is considered to be the most desirable location within the San Jose submarket.
In addition to 3939 North First Street, the joint venture between W3 Partners and AllianceBernstein U.S. Real Estate Partners L.P. also includes the Sun Power Campus, a three-building R&D office complex that W3 Partners acquired in October 2012. Built in 1985 and completely renovated in 2011, the 185,074-square-foot Class A property is situated on approximately 11 acres at 51, 77 and 145 Rio Robles Drive. W3 Partners is operating partner for that project as well.
The fourth quarter of 2012 was a busy time for W3 Partners. In addition to its recent transactions, W3 Partners “round tripped” its investment in 543 Howard located in downtown San Francisco. W3 recapitalized ownership of this South of Market asset in early 2012. The firm operated the asset and made significant leasing and operational progress. Susan Sagy, co-founding partner of W3 commented, “We had intended to hold this investment for several years but as a fiduciary, it is important to take advantage of opportunities to lock in, and realize profits for investors. Our investor returns were far in excess of original projections.”
About W3 Partners
W3 Partners is a privately-held, women and minority owned investment management firm that combines the best attributes of a real estate operating company with those of an investment fiduciary. W3 focuses on making investments in office and office/R&D assets with value added or repositioning potential in strategic locations in the San Francisco Bay Area, Southern California and Pacific Northwest. W3 Partners was founded in 2009 and formed a strategic joint venture with Dallas-based, Akard Street Partners, L.P., an investment partnership operated by Hunt Realty Investments, Inc. Akard Street Partners is a partnership created by Hunt Realty and the Teacher Retirement System of Texas to invest capital, in selected commercial real estate operating companies across the United States.
About AllianceBernstein U.S. Real Estate Partners L.P.
AllianceBernstein U.S. Real Estate Partners L.P. is a $680 million fully discretionary real estate private equity fund, sponsored by AllianceBernstein L.P., which targets investments in real estate focusing on all product types and geographies within the U.S.