By Jon Peterson
Cleveland-based Boyd Watterson Asset Management has acquired the 399,636 square foot 1515 S Street office building in Sacramento for around $115 million, according to sources familiar with the transaction.
Boyd Watterson declined to comment when contacted for this story.
The seller of the property was a Hines/Oaktree/JMA Ventures entity. The venture had held ownership to the property since May 2016, when they acquired the property for $68.5 million, as stated in public records. The sale of the property represents one of the largest to hit the Sacramento office market in over a year.
The cap rate on the disposition was in the range of six percent to seven percent, as stated by sources that were aware of the sale. This return is based on the current rents coming out of the property.
The listing agent on the sale was Cushman & Wakefield. Participating in the sales process included Adam Lasoff and Seth Siegel. Cushman & Wakefield declined to comment when contacted for the story.
There was a tremendous amount of buyer interest in the property, according to industry sources. A strong and diverse set of capital sources is actively taking a look at Sacramento to acquire properties, something that has not been the case for this market in the past.
The property at closing was 98 percent leased to two tenants. One of them was the California Department of Corrections and Rehabilitations. This tenant occupies 72 percent of the property’s net rentable area. The California Department of Human Resources is the other tenant, and it occupies around 26 percent of the property. Both of these tenants have leases that will last through February 2029.
1515 S Street produces other income besides the office building rent. There also is an eight-story parking garage that has room for 759 stall. This operation generated nearly $1.8 million of revenue over the past 12 months. The income from parking is projected to rise by over five percent in 2019.