Details on Harvest Properties’ and Invesco’s $210MM Office Deal in San Mateo

By Meghan Hall

In July of 2018, Los Angeles-based Hudson Pacific Properties, Inc. sold a portfolio of six mid-rise Class A office buildings in San Mateo’s Peninsula Office Park along Campus Dr. to Emeryville-based Harvest Properties and Atlanta, Ga.-based Invesco Real Estate. The all-cash transaction is broken down in newly available public documents that show the price paid for each of the buildings. Harvest Properties and Invesco bought the properties $210 million from Hudson Pacific Properties, Inc. before credits, prorations and closing costs.

Buildings 1-5 and 7 were 83 percent occupied at the end of the first quarter of 2018 and cover 447,739 square feet. Harvest Properties and Invesco paid a range of prices for the six buildings. The largest dollar amount was for 2955 Campus Dr., a four-story building, which went for $67.4 million. 2988 Campus Dr. was the smallest, at $19.2 million.

Harvest Properties and Invesco paid $42.3 million for 2929 Campus Dr., and $36.5 million for the three-story building located at 2755 Campus Dr. 2655 Campus Dr. and 2800 Campus Dr. went for $23.3 million and $21.3 million, respectively.

Hudson Pacific sold Building 6 located at 2600 Campus Dr. to Golden Pacific Investments in the first quarter of 2018 for $22.5 million or $356 per square foot. The 63,050 square foot building was 100 percent vacant at the time of the sale.

“The sale of Peninsula Office Park’s remaining six buildings exemplifies our approach to recycling capital to further focus on strategic holdings in our core markets,” said Victor Coleman, Hudson Pacific’s Chairman and CEO in a statement in July of 2018 when the sales were announced. “We will continue to enhance our already high-caliber office portfolio by capitalizing on favorable market conditions, and we are always looking for creative ways to maximize value for our shareholders. We intend to re-deploy proceeds from this successful two-part sale to fund prudent, long-term growth, including the acquisition of higher-yielding opportunities.”

The San Mateo office market continued strongly in the third quarter, with the county’s vacancy rate sitting at 6.8 percent, according to Colliers International’s San Francisco Peninsula Third Quarter Research and Forecast Report. According to Colliers, the vacancy rate is consistent with the previous couple of years, and lease rates have remained stable. The average asking rate increased from $5.31 per square foot from last quarter’s $5.14 per square foot, the highest average asking rate for San Mateo County in the past two years.

Office rental rates have continued to rise throughout the Peninsula during 2018 as large tenants such as Genetic and Facebook continue to lease up space in the region. These trends are not lost on Harvest Properties and Invesco, who purchased the portfolio in order to expand their holdings in the area.

West Coast Commercial Real Estate News