By Jon Peterson
New York City-based Almanac Realty Investors has finalized a $150 million equity investment in San Francisco-based Drawbridge Realty Trust, a privately held investment and development company that buys, develops and redevelopes commercial property.
The investment comes along with two other equity injections and will expand Drawbridge to a $600 million company. Drawbridge contributed existing real estate totaling 1.5 million square feet valued at $200 million. Drawbridge executives and individual investors have forwarded another $80 million.
Almanac now owns approximately 65 percent of Drawbridge.
This is the second investment that Almanac has made in a real estate operating company that dedicates much of its investment appetite to the San Francisco Bay Area. In August 2011, Almanac committed to invest up to $200 million in San Diego-based Westcore Properties. This firm has regional offices in downtown San Francisco and Sausalito.
“First and foremost, we believe in the organization at Drawbridge,” said Justin Hakimian, a director with Almanac Realty. “Co-founders Mark Whiting and Mark Pearson and the team as a whole have a proven and long-standing track record in the acquisition, development and redevelopment of commercial properties suited to large corporate tenants.”
Almanac Realty invested in Drawbridge and Westcore through its commingled Almanac Realty Securities Fund VI. The manager anticipates a total capital raise for the fund of approximately $1 billion. A final closing is expected soon.
“We generally have a favorable view of the San Francisco market. It’s characterized by a highly educated workforce and strong culture of education and R&D, and is a lifestyle market where people want to live,” Hakimian said.
Earlier this month Drawbridge initiated a marketing campaign to lease its newest Bay Area acquisition, 4900 Patrick Henry Drive in Santa Clara, a 74,000-square-foot, two-story research and development building.
The company paid $125 a square foot or $9.3 million for the empty property in January. It will have to invest another $200 a foot to lease the property, including the cost of eventual tenant improvements. “Our goal is to lease it to a single corporate user,” Drawbridge’s Whiting said.
Drawbridge has two strategies for buying property. “Around 50 percent of our new portfolio we would like to be stabilized and occupied properties. The other half will be value-add deals like Patrick Henry,” Whiting said.
The company will focus on Bay Area assets located from North San Jose to San Francisco. It will also be looking for properties in the broader western region, including Texas.
For the most part the properties will be office buildings and R&D properties with a few industrial buildings. The company typically likes to buy sites occupied by a large corporate user or two.
Drawbridge may convert its platform to public company status in the future. “This is something that we would be thinking about down the road,” said Whiting, who was co-founder, president and director of the former TriNet Corporate Realty Trust Inc.