By Jon Peterson
California State Teachers Retirement System working with Los Angeles-based CBRE Global Investors has paid $162.5 million or $650 per square foot to buy the 250,000 square foot office building located at 3333 Scott Blvd. in Santa Clara, according to sources with direct knowledge of the transaction.
Both the pension fund and CBRE Investors declined to comment when contacted for this story.
The seller of this property was a venture with Palo Alto-based Menlo Equities and Boston-based Beacon Capital Partners. The listing agent on the sale was the Silicon Valley office of Eastdil Secured. Both Menlo Equities and Eastdil Secured declined to comment when reached for this article.
The cap rate on this transaction was in the 5.5 percent to 5.6 percent range. This return is based on the property’s existing net operating income. CalSTRS bought the core property as a separate account acquisition through CBRE Investors as its manager.
The building purchased is a six-story asset that is now 100 percent leased to Hewlett Packard Enterprises. This tenant has signed an 11-year lease on the property and the lease became effective in January of this year.
This building is part of phase II of the major office campus development at 3333 Scott Blvd. There are two other parts of phase two. One of these are three eight-story office buildings totaling 940,000 square feet that are fully-leased to Palo Alto Networks with an 11-year lease. This phase also has a 40,000 square foot wellness and fitness center.
The buildings leased to Palo Alto Networks are just being brought to the market for sale now. The potential asking price is anticipated to be at or higher than the sales price on the building leased to Hewlett Packard, according to sources familiar with the property. Eastdil Secured will be the listing agent on the sale of these buildings.
Menlo Equities and Beacon Capital have been involved with the project at 3333 Scotts Blvd. for a long time. All of the 30.2 acres of land for this project was acquired in July 2011. Menlo Equities was the development partner in the project with Beacon being the main capital source on the project.