Boston Properties Buys In Mountain View

Jon Peterson

Boston-based Boston Properties Inc. has paid $71.5 million to acquire 2440 W. El Camino Real in Mountain View, a 140,000 square-foot office building.

The publicly traded real estate investment trust paid all-cash. It expects a 2012 unleveraged cash return of 6.3 percent based on current rent, according to its fourth-quarter investment report.

The seller was Tishman Speyer Properties. The New York City-based firm has a regional office in San Francisco. Managing Director Allen Palmer did not respond to phone calls seeking comment.

It is a good time to be a seller in Mountain View, said Phil Mahoney, a principal and executive vice president with Cornish & Carey Commercial Newmark Knight Frank in its Santa Clara office. Mahoney represented Tishman when it bought the property in 2007 and in the most recent sale.

“Vacancy for office assets in Mountain View is in the low single digits. Rents went up 15 percent in the market over the past 12 months. For 2012, we are expecting more of the same. There is no new office development, which makes existing properties that much more attractive,” Mahoney said.

Tishman paid $55 million for the asset, he said. It was 20 percent leased at the time. It’s now 100 percent leased to a variety of tenants, including the Silicon Valley Community Foundation, New York Life Insurance Co. and Intellectual Ventures Management LLC, a venture-capital firm. There are no major leases coming up for renewal in the next few years.

“Tishman Speyer had made improvements to the property. Its investment fund was nearing its end, and it was time to move the property out of the portfolio,” Mahoney said.

The building, which has underground parking—an anomaly in Silicon Valley—also is adjacent to The Village at San Antonio Center. The 16.4-acre redevelopment, which is underway, aims to bring nearly 320,000 square feet of new retail and 325 apartments to the area. The Safeway-anchored center and apartments are supposed to be complete by mid-2013. An existing Target, Kohl’s and Walmart store are also nearby.

Boston Properties has a regional office in San Francisco. Scott Landsittel, an executive there, did not respond to phone calls or e-mails seeking comment. Boston Properties focuses on supply-constrained markets with high barriers to entry, according to its public filings.

Through December, Boston Properties owned 18 in-service Bay Area office properties totaling 5.1 million square feet. That includes the four-building Embarcadero Center in San Francisco, the Gateway Commons in South San Francisco and 303 Almaden Blvd. in downtown San Jose, according to its Web site.

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