By Jon Peterson
San Francisco-based Ellis Partners has paid close to $280 million to acquire the Pruneyard mixed-use office, retail and hotel asset in Campbell, according to sources with direct knowledge of the transaction.
Jim Ellis, managing principal for Ellis Partners, declined to comment on what it paid for the property and what capital source the company brought into the transaction.
“We are very excited about being able to close on this transaction. We are looking forward to rolling up our sleeves and getting to work on this property. We will be meeting with people who live and work in the area near The Pruneyard to see what changes they would like to see happen with the property in the future,” says Ellis.
The capital source involved in this transaction along with Ellis Partners is New York City-based The Fortress Group, according to sources who were aware of the deal. This investment will be the first time that Ellis Partners and Fortress have completed a deal together.
This transaction represents a new market for Ellis Partners. “We have not completed any other deals in Campbell before The Pruneyard. We do have experience with other properties in Silicon Valley. We did acquire and renovate The Town & Country Village Shopping Center in Palo Alto, and we also have the one million square foot project known as 101 Tech in North San Jose,” said Ellis.
Ellis does see a chance to add some value to the office part of the project in the future. “There is a significant amount of tenants in the office space with rents that are below market where we could add value as the leases come up for renewal,” said Ellis.
According to the property’s offering document, the in-place rents in the office space are 30 percent below market and 54 percent of the leases will be expiring by the end of 2016. The office part of The Pruneyard is 365,229 square feet in three buildings with a current occupancy of 95.9 percent.
There could be some changes made to the retail in the future as well. “We will be looking at what kinds of retail offerings we might want to include down the road to make it more attractive for the workers and the people who live in Campbell,” said Ellis.
The retail part of the property totals 253,160 square feet and is now 96.3 percent occupied, according to the property’s offering document. The main tenants in the property include a Trader Joe’s and Marshalls.
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