Divco Plans $260MM Purchase of South Bay, Peninsula Buildings

Marcus & Millichap Capital Corp, Silicon Valley, Bay Area, Marcus & Millichap, Santa Clara, San Jose, San Francisco

By Jon Peterson

San Francisco-based Divco West Properties is eyeballing a $260 million investment in multiple Silicon Valley and Peninsula buildings including three in San Mateo, two in San Jose and two more in Santa Clara, according to multiple sources familiar with the transaction.

Sunnyvale The Registry real estate Silicon ValleyThe seller of the portfolio is Chicago-based Equity Office, a former publicly traded real estate investment trust that was merged in 2007 with affiliates of New York City-based The Blackstone Group.

Among the properties to change hands are Santa Clara’s TechMart and Mission Tower I. Both are situated on the city’s two-mile-long Great America Parkway and bracket the new San Francisco 49ers football stadium. Great America Parkway connects state Highway 237 in the north to U.S. 101 in the South. Both interchange points have been the subject of investor interest in this cycle.

Neither the sellers nor the buyers responded to calls for comment.

The portfolio was offered for sale as an off-market transaction, according to sources familiar with the sale. It was shown only to a few buyers.

TechMart is a five-story office complex at 5201 Great America Parkway. The Class A office property totals 282,505 square feet, according to the Equity Office Web site. Mission Towers II is located on Freedom Circle Drive next to the U.S. 101 and near the Great America exchange. Cassidy Turley Commercial Real Estate Services is managing the property’s leasing from its San Jose office. The company declined comment for this story.

Besides this transaction, Divco is also under contract to buy the 550,000-square-foot 333 Bush St. in San Francisco, according to published reports.

The real estate manager has a variety of investment sources for its deals. One of them is DivcoWest Fund III, a commingled fund for which it raised in excess of $871 million in equity, completing the capital raise in 2011. With a planned 55 percent to 60 percent leverage, the fund is expected to acquire assets with a total purchase price of more than $2 billion.

West Coast Commercial Real Estate News