In $21.8MM Transaction, Two-Building R&D Property in San Jose Gets New Equity Partner

Westcore Properties, San Jose, Arizona State Retirement System, Silicon Valley Research Center, Stockbridge Capital
Image Courtesy of Westcore Properties

By Meghan Hall

After just about two years of ownership, Westcore Properties has brought on a new equity partner for the Silicon Valley Research Center, a two-building research and development property located at 1110 and 1120 Ringwood Court in San Jose. In a $21.83 million transaction that closed on November 8th, Westcore Alpha Ringwood LLC is now listed as the property’s owner, according to public documents. The entity shares the same address as Westcore’s La Jolla, Calif. office, indicating the presence of a new partner as opposed to a traditional land sale.

Westcore Properties declined to comment on the transaction.

Building One is located at 1110 Ringwood Court contains 46,040 square feet of space, while Building Two is slightly smaller, with 32,552 square feet. The two buildings were constructed in 1984. Westcore Properties originally acquired the asset in April of 2018 for $11.7 million, or nearly $149 per square foot. At the time of the transaction, LBA Realty was the seller.

The transaction occurred just before The Registry reported that Westcore Properties formed two new, separate account relationships that gives the firm the ability to acquire $1.25 billion of industrial assets in the coming years.

“Our investor base has continued to expand and diversify giving us current purchasing power over our near-term deployment horizon,” said President and CEO of Westcore, Don Ankeny, in a statement.

The largest new account will be with the Arizona State Retirement System, which has allocated $400 million of equity into a separate account with Westcore. The relationship will have a total capitalization rate of around $800 million with 50 percent leverage. Westcore will have investment discretion on the account, according to the pension fund.

An un-named insurance company is the separate account; its initial investment will total $150 million but would provide a total capitalization of around $300 million. In addition, there will be $100 million co-investment coming from Westcore. 

Westcore and its partners hope to target returns of 12.5 percent IRR over the lifetime of the relationships, and Westcore plans to make investments into both core and non-core assets. Westcore said in a statement that it would be targeting new geographies, management platforms and assets in the industrial, warehousing and distribution sectors. It is unclear at this time whether the new equity partner brought on for the Silicon Valley Research Center happens also to be one of Westcore’s new account relationships.

Based in San Diego, with its corporate offices located in La Jolla, Westcore has been known to focus on primarily industrial assets along the West Coast since its founding in 1978. To date, the firm has in management excess of 9 million square feet of assets and another 6 million square feet marketed for sale, according to its website. In 2003 the company partnered with Dubai Investment Group to co-invest $600 million over a four-year period, while in 2011, Westcore obtained a $200 million investment from Almanac Realty Advisors to scale the company and take advantage of acquisition opportunities. And, more recently in 2016, Westcore received another $337 million commitment in growth capital from Almanac Realty Advisors.

In August of this year, Westcore sold an industrial portfolio to Stockbridge Capital for $570 million. The portfolio included 11 Northern California locations, one in Arizona, 12 Nevada assets, one Utah property and one Indiana property. The per-foot price of the portfolio came to about $89.

“This sale demonstrates our business strategy,” said Don Ankeny, president and CEO of Westcore Properties in a statement at the time of the transaction. “We’re careful to select value-add properties where we can make a difference and return a premier asset to a thriving industrial market. We are very positive about the underlying market fundamentals for industrial property. We’re continuing to work with our broker partners to identify and secure industrial properties in established and emerging markets where we can unlock value and continue to grow our business.”

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