By Jon Peterson
A consortium of 12 lenders have come together to cover 90 percent of the total cost of the initial 943,056 square foot phase of the Moffett Place development in Sunnyvale being developed by San Francisco-based Jay Paul Company and is all leased to Google. The construction loan provided by the lenders is for $610 million.[contextly_sidebar id=”HOXuxmzdyDK0HMG0zcZXZQkKg6egkOak”]“I think that the amount of debt we were able to arrange speaks to the project on several levels. We believe that this project has very little risk. We had already started the project using our own cash prior to the loan being arranged. There also was the fact that the project is pre-leased to Google and that it’s located in a very strong market. I think that without all of these factors, the funding on the project would likely have covered around 65 percent,” says Matt Lituchy, chief investment officer of Jay Paul Company.
The lead lender in the project is Wells Fargo. There was so much interest by lenders for this project that Jay Paul had to turn down capital. “The funding for our project was over-subscribed by 30 percent. I think this is another reflection of the strength of our development,” said Lituchy.
Jay Paul had hired San Francisco-based Manatt, Phelps & Phillips to provide legal representation on the transaction. The efforts by the law firm was led by Clayton Gantz, a partner, Grace Yang, associate and Scott Johnson, counsel.
Jay Paul started construction on the first phase at Moffett Place in fourth quarter of 2013. The first building should be completed by next month. The second and third buildings will be done at some point during the second and third quarters of this year.
Infrastructure work on the second phase has begun. Construction on this part of the project could be started sometime during the next 12 to 24 months. The entire project is for six buildings and totals 1.9 million square feet, all of it leased to Google, which was the largest lease recorded in the Bay Area in 2014. The lease was also the largest ever lease in Silicon Valley and in the nation, according to Phil Mahoney of Newmark Cornish & Carey, Jay Paul’s long time broker who represented the landlord in the transaction. Mahoney is based in the firm’s Santa Clara office.
Rendering by DES Architects + Engineers