GI Partners Buys Santa Clara Office Asset for $41MM

Santa Clara, San Francisco, GI Partners, Walsh Bowers, Silicon Valley, Equus Capital Partners, Cushman & Wakefield, Equus Investment Partnership X, REEF, DivcoWest, Swift Real Estate Partners, Apple

By Jon Peterson

One of the few transactions that has happened in Santa Clara recently closed this week when San Francisco-based GI Partners purchased the 106,500 square-foot Walsh Bowers property. The sales price on the transaction was $41.5 million, or just under $385 per square foot, according to sources that track the sale of office/R&D properties in the Silicon Valley region.

The seller of the property was Equus Capital Partners. This company had worked with Cushman & Wakefield as the listing agent on the sale, and those working on the sale included Eric Fox and Steve Hermann. Cushman & Wakefield declined to comment when contacted for the story.

Equus had owned the property since 2017 when it had paid $31.5 million for the buildings, according to public records. This investment was made for the manager’s commingled fund that goes by the name of Equus Investment Partnership X. The manager had a final close on the capital raise for the fund of $361 million at the end of 2016. The commingled fund had a national investment strategy of investing in office, apartments and R&D assets.

This latest transaction will represent the fourth time the property has traded hands over the past several years. It had been acquired in the past by three other institutional owners. It went from RREEF to DivcoWest and then to Swift Real Estate Partners who then sold it to Equus.

Walsh Bowers is located at the intersection of Walsh Avenue and Bowers Avenue. The addresses of the two buildings are 2710 Walsh Avenue and 2845-55 Bowers Avenue. The buildings are considered to be office/R&D buildings. There are no vacancies in the property at this point, and the leases have an average remaining lease term of 3.3 years.

The property has a big redevelopment potential for the future. It is located within the High Intensity office/R&D overlay zone in Santa Clara. This classification would allow the existing site to increase the buildings on site from a 0.39 FAR to a 2.0 FAR. This would translate to a total square footage allowed on the site of around 550,000 square feet.

Another possible future play with the property is to mark-to-market the existing rents in the property. Apple has a lease in the property, and it occupies roughly 30 percent of the space. This current lease is roughly 40 percent below market, according to some estimates. The other two major tenants in the asset are EAG Inc. and miraDry Inc. Their leases in the property are around 15 percent below market.

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