CBRE Global Investors Buys Industrial Properties in Fremont for $37.5MM at 7 Cap Rate

CBRE Global Investors Fremont San Francisco Solar City Digital Realty REIT CBRE Bay Area


By Jon Peterson

Los Angeles-based CBRE Global Investors has acquired two R&D manufacturing properties in Fremont at a 7 cap rate, according to multiple sources that were aware of the transaction. This return is based on the current rent produced by the property. Both properties are leased to Solar City on a long-term lease.

[contextly_sidebar id=”k1O2VNxg4qhqeXdbPYbA3E89yjj4t3RY”]The seller of the property was San Francisco-based Digital Realty. This company is a real estate investment trust focusing on developing and managing data center and critical mission facilities. Digital Realty is one of the 20 largest REITs in the country with an equity market cap of $11 billion. The company had owned the property since 2003. With the sale, the company will be making roughly 30 percent profit on the transaction. The sales price on the property was $37.5 million, or roughly $187 per square foot, and Digital Realty had placed a book value on the asset of $28.6 million as of the end of 2014, according to a public document from the company.

Digital Realty is now known as a data center REIT. The company had decided to sell the property since it no longer is trying to buy technology related real estate and is only interested in data centers. The assets in Fremont were legacy assets and not part of its core portfolio going forward. The listing agent on the sale was the San Jose office of CBRE. The people involved were Joe Moriarty, executive vice president, and Chip Sutherland, senior vice president.

The two properties that were sold are located at 47700 Kato Road and 1055 Page Avenue; they are next to each other, althought the addresses are different. The two buildings total 199,352 square feet. CBRE Global Investors declined to comment on the purchase price and cap rate of the transaction. “We look at the two buildings as strong core assets that we plan on holding for a long time. Fremont is a market that is improving not only with companies like Solar City and Tesla, but with other companies that do business with technology companies,” says Gardner Ellner, a director with CBRE Global Investors. He works on acquisitions for the company from Denver to the West Coast that includes deals from Seattle to San Diego.

CBRE Investors acquired the property for a core commingled fund that the company manages.  Ellner declined to give the name of the investment fund. The real estate manager is looking for additional core transactions in the San Francisco Bay Area. These would include a combination of office, industrial and retail assets.

West Coast Commercial Real Estate News