By Meghan Hall
After five years of ownership, San Francisco-based Ellis Partners has sold its DoubleTree by Hilton Hotel, located at The Pruneyard in Campbell to two investors — Santa Barbara, Calif.-based Somera Capital Management and Los Angeles-based Tyler Development Corporation — at the end of March, according to public documents. The 169-key hotel sold for $59.1 million, or just under $350,000 per room.
The sale was part of a joint venture in which Tyler Development Corp. purchased a 28 percent stake in the property. Ellis Partners had originally purchased the property alongside New York-based Fortress Investment Group in 2014. At the time, the two firms invested in the hotel, plus the mixed-use retail and office part of The Pruneyard for $267.38 million.
Paramount Lodging Advisors’ Senior Managing Director of the Western U.S. Scott Griemsmann and Managing Director Brian Guernier worked on behalf of Ellis Partners and Fortress to arrange the deal. In all, the center totals 27 acres, with 253,000 square feet of retail and 365,000 square feet of office space.
Located at 1875 S. Bascom. Ave., The Pruneyard is home to an array of eateries and retailers such as Mendocino Farms, Patxi’s Pizza, Peet’s Coffee and Marshalls. In addition to office space, entertainment and fitness uses such as The Pruneyard Cinemas and sculpt50, are also part of the center. The center is within walking distance of the Hamilton VTA light rail station, served by the Mountain View-Winchester line, and State Route 17 sits just adjacent to the site. Downtown Campbell is minutes away, while downtown San Jose — California’s largest city and a major entertainment and business hub — is about a 45-minute drive from the site.
In February of this year, Oaktree Capital Management purchased a majority stake in the office portion of the center, which includes three Class A office buildings. The deal totaled $141.5 million, according to previous reporting done by The Registry.
“This is a one-of-a-kind, amenity-laden property in Silicon Valley’s West Valley. These office towers lie within the exact type of amenity and entertainment options that today’s office tenants are increasingly demanding. Our tenants have the best of all worlds,” said Jim Ellis, Managing Principal of Ellis Partners in a statement at the time of the transaction. “We are thrilled to have Oaktree as our new partner which allows us to invest even more deeply into these towers in keeping with all of the major changes we have implemented on the attractive retail, food and entertainment offerings right outside the front door.”
The fresh capital will help Ellis Partners continue its efforts to modernize the center, which began in January of 2017. The launch of the renovations to the retail portion of the center — originally developed 1969 — began just as Ellis Partners wrapped up a modernization of the hotel, which included enhancements to the lobby, corridor and fitness center. A second phase of retail repositioning is expected to include 40,000 square feet of new space and infrastructure improvements, including parking.
Ellis Partners is active throughout the San Francisco Bay Area, and since its founding in 1993 has acquired and developed a variety of office, industrial, retail, residential and mixed-use properties valued at more than $2.5 billion. The firm targets unique real estate investment opportunities, such as The Pruneyard, that can produce additional value and impact for tenants and surrounding communities.