Lane Partners and PIMCO Taking RREEF Peery Park Portfolio in Sunnyvale

Lane Partners, Sunnyvale, Chinese, 500 and 501 Macara Ave., Menlo Park, Peery Park, PIMCO, Kinship Capital, SIMEON Commercial Properties, Kilroy Realty

By Jon Peterson

Menlo Park-based Lane Partners and Newport Beach-based PIMCO are in the process of buying the 508,946 square foot portfolio of office/R&D buildings in Sunnyvale, according to sources familiar with the transaction. This real estate is generally referred as the Peery Park portfolio. The deal is set to close by the end of month. Terms of the transaction have not been announced at this time.

City_of_Sunnyvale_sign“We are not able to discuss the transaction at this point,” wrote Andrew Haydel, principal with Lane Partners in an e-mail. PIMCO did not respond to phone calls seeking comment for this story.

The current owner of the portfolio is New York City-based Deutsche Asset & Wealth Management, the real estate manager used to be known as RREEF. It did not respond to phone calls and e-mails seeking comment for the story.

The listing agent on the sale was CBRE. One of the lead people working on the sale is Joe Moriarty, an executive vice president in the company’s San Jose office.

The portfolio that is up for sale involves a total 16 properties that are located in the Peery Park submarket on Sunnyvale, according to the offering document. The properties range in size from 10,856 square feet to 59,500 square feet, and the buildings in totality are now 94 percent occupied.

Apple is a tenant in three of the buildings taking up one third of the portfolio. The company occupies all of the space in the buildings located on 485 and 350 Potrero Avenue and 810-820 West Maude Avenue. Other tenants in the portfolio include Intuity Medical, Ruckus Wireless, Zoll Medical and EBR Systems.

Deutsche has owned these assets since 2006. They were part of the 5.3 million square foot Peery-Arrillaga portfolio that was purchased by the real estate manager in 2006 for more than $1 billion.

As one of South Bay’s most active markets, Sunnyvale has been home to a slew of development and expansion activity. In September, Los Angeles-based CommonWealth Partners paid over $260 million to acquire the 424,000 square foot Sunnyvale Office Park, where Juniper Networks has its headquarters. This was preceded by Swift Realty Partner’s $30 million purchase of two buildings in the rapidly transforming Moffett Park. GoDaddy, Walmart.com and Twitter all have moved into the region, as well.

Sunnyvale is one of the South Bay cities connected well to public transportation. It is something that technology companies value as a plus, said Eric Fox, a senior managing director and principal in the San Jose office of Cassidy Turley Commercial Real Estate Services.

Deutsche owns the buildings for sale through its commingled fund, RREEF America REIT III. This fund holds a portfolio with a net asset value of $779 million, as of the end June 2013. This is according to a report sent to the commingled fund’s investors during the third quarter.

The value-added open-ended commingled fund has 23 percent of its portfolio located in the west region. There are a total of 60 investments in the fund. The vast majority or 78 percent of the portfolio is made up of office or industrial properties. It also owns some retail, residential as well as land, and other development property types.

Lane Partners currently owns a real estate portfolio totaling approximately 2 million square feet in Silicon Valley, according to its Web site. The company, which was formed in 2006, is known as a value-add investor that looks to improve assets through physical rehabilitation, lease-up and re-structuring. PIMCO invests in real estate for a variety of institutional investors including foundations and endowments.

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