By Jon Peterson
New York City-based Morgan Stanley Real Estate has acquired the 287,539 square foot Parkway Corporate Plaza medical office building in Roseville for $79 million, or roughly $275 per square foot, according to sources that are familiar with the sale of this property.
The seller of the property was Delaware-based Anchor Health Properties, and the listing agent on the sale was Cushman & Wakefield. The people involved in the sale included Seth Siegel and Adam Lasoff. Cushman & Wakefield declined to comment when contacted for this story.
The property in Roseville is located at 1620, 1640, 1660 and 1680 East Roseville Parkway. The property has buildings that are a mixture of three single-story buildings and one two-story asset. The complex was developed between 1999 and 2000 and was renovated in 2017/2018.
The sales price on the property at $275 per square foot puts the transaction below the replacement cost of $350 to $375 per square foot for a building of similar quality and design, according to sources that track this information for the greater Sacramento market.
Parkway Plaza has no vacancies at this time. Some of the major tenants in the property include Kaiser Permanente, Sutter Health, Wells Fargo, UC Davis and the State of California Department of Social Services. The average remaining lease term is around seven years.
There has been a fair amount of capital committed to the property from the seller and the tenants. One part of this was $1.4 million spent for tenant improvements and more capital for lobby and landscape renovations, exterior painting and common area upgrades.
The property’s medical tenants have also invested or budgeted at least $30 million in tenant improvements. In the past two years, around $8 million was spent on tenant expansions. UC Davis has recently budgeted almost $20 million for their new buildout.
Morgan Stanley acquired Parkway Plaza for its core open-ended commingled fund, The Prime Property Fund, as stated by sources aware of the transaction. This fund does have a history of buying assets outside of the four main property types of office, industrial, retail and apartments. Through the third quarter of 2018, the fund had invested 7.61 percent of its portfolio in other property types.
The Prime Property Fund has a total net asset value of $22.6 billion. The West region has the largest percentage in the commingled fund of any region in the country at 37.1 percent.