By Jon Peterson
Hines and Oaktree Capital Management are in the process of buying the 515,306 square foot Ygnacio Center office complex in Walnut Creek for approximately $221 million, or $420 per square foot, as stated by sources with direct knowledge of the transaction.
Hines did not respond to emails when contacted for this story, and the sale of this property has not closed yet. The complex is located at 2001 and 2033 North Main/1990 North California Street in Walnut Creek.
The seller is Chicago-based La Salle Investment Management. The real estate manager declined to comment when contacted for this story, as well. The listing agent on the sale is the San Francisco office of Eastdil Secured.
LaSalle has owned the property since May of 2016 when the real estate manager paid $158 million for the property. This deal produced a 5.3 percent cap rate, based on the property’s existing net operating income at that time.
During the time La Salle had owned the asset, it placed debt on the property of $107.8 million that was provided by AXA Group.
The property’s proximity to the downtown area as well as the Walnut Creek BART station has been a successful formula for the owners and their leasing efforts. Two tenants in the complex are Wells Fargo, which occupies 47,500 square feet in the property, and City National Bank, which has 25,000 square feet.
LaSalle had purchased the property for its closed-ended commingled fund, LaSalle Income & Growth Fund VII. This fund had a $510 million capital raise in 2016. One of the investors in the fund with a $75 million commitment was the Contra Costa County Employees Retirement Association.
This commingled fund has a value-add investment strategy. The targeted returns for the fund are a 14 percent to 16 percent gross IRR. The fund looks to invest in assets on a nationwide basis. Most of the deals will be with the main property types with existing assets.