Broadreach Capital Sale of Two Assets Could Fetch Low $50MM

Palo Alto, Broadreach Capital, San Leandro, JLL Capital Markets, San Francisco, Bay Area, Menlo Park, REIT

By Jon Peterson

Palo Alto-based Broadreach Capital Partners has put on the market for sale two industrial buildings in San Leandro totaling 438,000 square feet. The pricing on these assets could total in the low $50 million range or somewhere between $115 to $120 per square foot, according to sources that track the sale of industrial assets in the East Bay.

Broadreach has awarded the listing for the sale to the JLL Capital Markets Team in the San Francisco Bay Area. The lead on this assignment is Will Connors, a managing director in the Menlo Park office, and Erik Hanson, a senior vice president in the San Francisco office. JLL declined to comment when contacted for this story.

The properties involved in the sale are located at 2010 and 2020 Williams Drive. There are no vacancies in either building. The property located at 2010 is 100 percent occupied by 21st Amendment Brewery. The building at 2020 is fully leased to four companies.

Both properties were originally developed in the 1940s and have been renovated several times since then. The assets represent a core-plus opportunity for the new owner. The in-place rents are currently at 20 percent below market, according to sources who are tracking this information in this submarket. The industrial market in San Leandro remains very tight, so the new owner should be able to bring the rental rates in the buildings up to market once the leases roll. The five tenants in the two buildings have an average remaining lease term of 5.5 years.

The cap rate on the sale of the two buildings should be somewhere in the low 5 percent range, according to sources familiar with the industrial market along the I-880 corridor. This yield will be based on the current in-place rents.

The expectation is that the assets in San Leandro should attract several types of investor groups. These would include domestic investment funds, opportunity funds and perhaps some industrial REITs, as well.

Broadreach has owned these properties for approximately 10 years. These assets have been held in an investment fund that is approaching the end of its life, which is the primary reason the properties are being brought to the market for sale at this time.

The planned sale of the two industrial buildings follows a land sale done by Broadreach to DCT Industrial Trust for 3.6 acres located at 2001 Williams Drive. The sales price was $5.4 million. DCT will be starting this fall on a 75,000 square foot industrial project on the land.

West Coast Commercial Real Estate News