By Jon Peterson
The Emeryville home to the Clif Bar & Co. headquarters has gained a new capital source: The New York State Common Retirement Fund.
The giant pension fund has provided the equity from its emerging manager program, in this case to San Francisco-based Ellis Partners LLC, which owned the building with another capital source. Ellis Partners has owned Emery Tech since 1997.
Clif Bar occupies roughly half the 227,240 square feet at the Emery Tech building at 1400 65th St. in Emeryville. The property is fully leased.
“We like the Emeryville office market as a spillover to the San Francisco office market, and one we think is very attractive,” said Deborah Harmon, chief executive of Chevy Chase, Md., -based Artemis Real Estate Partners, which oversees the emerging manager program for New York Common.
Neither Ellis nor Artemis nor New York State Common would disclose financial details of the transaction.
Clif Bar signed its lease two years ago and has another 13 years remaining. The nutrition and energy bar company first moved to Emeryville in 2009 and at that time had 280 employees, according to the city. Today it has 311, according to the company.
State Farm Insurance also leases approximately 35,000 square feet at Emery Tech.
“Our deal in the emerging manager program with New York Common calls for us to invest anywhere from $15 million to $30 million of equity per deal. In the case of Emery Tech, we were within that range,” said Jim Ellis, managing principal with Ellis Partners.
Harmon feels strongly about teaming up with Ellis in the emerging managers program. “We look at them as a very strong player in the office market in the San Francisco Bay Area. They are a proven player with a strong track record with the property type in the region,” she said.
Ellis is looking for additional office building transactions in the San Francisco region on behalf of the emerging manager program. The investment strategy for this capital is a core-plus arrangement, acquiring existing properties that have strong current income and the capability to grow in value through a re-leasing or expansion of the property. The core-plus expectation from Emery Tech is to re-lease the property at higher rates when existing tenant leases come up for renewal.
The transactions for Ellis in the emerging manager program could be in either major markets like San Francisco and Silicon Valley and in secondary markets such as Emeryville.
The capital awarded to Ellis Partners was placed on a non-discretionary basis, meaning both Ellis and Artemis need to come to an agreement on each transaction before an actual closing can occur.
New York Common allocated $300 million in equity to the emerging manager program a year ago. The initial goal is to have up to 10 managers with less than $1 billion of equity under management and extensive local market knowledge and property-type expertise. The pension fund had a real estate portfolio valued at $9.3 billion at the end of March, 6.2 percent of the $151 billion in total plan assets.
The Emery Tech capitalization is Artemis’ first San Francisco deal, but the Artemis Real Estate Partners I commingled fund, which has raised $436 million, is now tracking value-added opportunity.
Photo courtesy of ZGF Architects