By Jon Peterson
San Francisco-based Ellis Partners will be closing Friday on the acquisition of the 203,938 square foot office building in Dublin located at 1 Park Place. The purchase price will be approximately $380 per square foot, or $77.5 million, according to sources familiar with the sale.
Ellis Partners declined to comment on this transaction when contacted for this story.
The seller of the property is the Black Creek Group out of Denver. This real estate investment firm hired Newmark Knight Frank as the listing agent on the sale of their asset. The team involved in the sale includes Steven Golubchik and Grant Lammersen, both Vice Chairmen at the firm, and Tyler Meyerdirk, a senior managing director. Newmark Knight Frank declined to comment when contacted for this story.
1 Park Place is considered to be a core plus asset. The core nature of the property is that it is 100 percent leased to three tenants. The two biggest leases in the property, TriNet and AEye, are using their space in the asset as corporate headquarters. TriNet has a lease in the building for 109,737 square feet and AEye for 56,549 square feet. The third tenant is Crown Castle for 36,960 square feet.
The average weighted lease time on the three leases is nine years. The in-place rents in the property are below market, so there is room to grow rents in the future. The Tri-Valley region in general is a market where rents still have room to grow. This area has rents for Class A assets that are about one-third of what Class A rents are in San Francisco, according to sources that track rents in both markets.
1 Park Place does have many amenities that major tenants value. At the site, there is a fitness center with showers, a conference/business center, a bike room and highly landscaped common areas. The property is a 10-minute walk from the Dublin/Pleasanton BART station and also near major retail shopping and apartment complexes.
Ellis is buying the property in a joint venture with Artemis Real Estate Partners. Artemis will be placing this property into its commingled fund called Artemis Real Estate Partners Income and Growth Fund. This is a commingled fund with a planned capital raising target of $750 million and a hard cap of $1 billion, according to a board meeting document from the Connecticut Retirement Plans and Trust Funds. This pension fund made a $100 million commitment into the commingled fund.
The investment fund has a core plus investment strategy. It will be looking for properties that can produce 9 percent to 11 percent net IRRs. One of the targeted markets for the fund is the San Francisco Bay Area. Other areas of interest include Seattle, Los Angeles, Boston and New York.