By Jon Peterson
Los Angeles-based CIM Group has put up for sale the 515,000 square foot office asset Ordway/1 Kaiser Plaza in Oakland. The pricing guidance on the sale is projected to be around $500 per square foot or roughly $257 million, according to multiple sources that are familiar with the sale.
CIM has picked the San Francisco office of JLL to be the listing agent on the sale. Among those working on the transaction will be Rob Hielscher, Erik Hanson, David Dokko and Michel Seifer. JLL declined to comment when contacted for this story.
CIM has been the owner of Ordway since October of 2008. The investor had acquired the property for $82.1 million at the time, or roughly $159 per square foot, according to public records. This asset was purchased as part of a five-property Oakland portfolio that CIM had acquired for $412.5 million from Philadelphia-based Brandywine Realty Trust, as written in published reports. In 2019, CIM sold three of the properties in the portfolio for $512 million to Starwood Capital. The assets in that sale included 2100 Franklin, 1900 Harrison Street and 2101 Webster Street. CIM also sold 1333 Broadway to Swift Real Estate Partners for $115.4 million.
If the sale of Ordway/1 Kaiser gets to the potential pricing level, it would produce a cap rate in the low five percent range, according to industry sources. This return would be based on the property’s current net operating income. The expectation is that a buyer of the property will be chosen sometime within the next 45 days or so.
The sale of the property will present the new owner with a hybrid investment opportunity that is considered to be a mixture of core plus/value add. The core plus nature of it is that Kaiser Permanente currently occupies roughly 70 percent of the property. This tenant has five years remaining on its lease.
Kaiser Permanente will be consolidating its presence in Oakland when it moves roughly 7,200 employees to Thrive Center in Oakland at 2100 Telegraph. This $900 million development, which will have 1.6 million square feet when completed, is planned to break ground later this year with a projected completion in 2023.
Once Kaiser completes its move, the new owners will have a value-add asset on its hands. Ordway can then be renovated, re-positioned and released to bring in either single or multiple tenants into the property.