By Jon Peterson
San Francisco-based Graymark Capital Investors has acquired the 50,311 square foot 160 Gibraltar Court office building in Sunnyvale for $10.2 million or $202 per square foot.
Graymark did not respond to several phone calls seeking comment for this story.
The property was previously owned by New York City-based W.P. Carey Inc. Both the buyer and seller were represented in the transaction by Cassidy Turley Commercial Real Estate Services.
“W.P.Carey is known in the industry as an owner of properties that are leased to a single-tenant on a long-term lease. 160 Gibraltar was going to have a change in the not too distant future with the tenant of the property and that is why it decided to sell the property,” says Kalil Jenab, executive manager director for Cassidy Turley. He worked on this deal and is employed in the East Palo Alto office of Cassidy Turley.
The tenant in the property is Juniper Networks. The company has had a lease in the property since late 2007. It has a lease that runs until November 30, 2016, after which the company is expected to vacate the property. The building is on a site that totals around 3.3 acres.
The sales price of the property produced a cap rate of 6.6 percent, according to Jenab, based on the current rent. The 12-month net operating income of the property is $694,292 beginning in December 1 of last year, according to sources familiar with the transaction.
Jenab does see that this property represents a value-added investment opportunity. “The rent in the property now is well below market. The triple-net rent will be $1.15 per square per month this year, $1.20 in 2015 and $1.25 in 2106. ]This compares to today’s market rents, which vary from $1.75 to $1.95,” he said.
Graymark Capital was formed in 2005, according to its Web site. The company is a value-added investor in a mixture of office, R&D, multi-tenant industrial, apartments and residential projects in California and Hawaii.
The office market in Sunnyvale remains tight. According to the fourth quarter 2013 office market snapshot from Cassidy Turley, the current vacancy rate for office building in Sunnyvale is 5.8 percent. The sub-market has 80 buildings totaling 7.3 million square feet.
Map courtesy of Apple