By Jon Peterson
If Oakland got its groove back toward the end of the last cycle, it may have already started to swing in 2021. In a deal that closed today, Swift Real Estate Partners has made one of its biggest acquisitions ever by paying roughly $327.5 million, or around $579 per square foot, to purchase a trophy asset located at 1111 Broadway in Oakland, according to public documents.
Swift declined to comment on the purchase price for the property, however it did highlight that the timing of the acquisition was in line with its investment strategy. “We are super excited to be the new owner of the property. This investment will result in a very strong risk-adjusted return for the company,” says Christopher Peatross, founder and president of Swift.
The seller of the property was The University of California Regents. It had put the property up for sale last October with pricing guidance projected in the range of $310 million, according to industry sources. The seller had been the owner of the property since 2014 when it bought the property for $215 million, as stated in public records. The listing agent on the sale was the San Francisco office of Eastdil Secured.
The asset was purchased at approximately 60 percent of replacement cost, according to some estimates. The property has a current occupancy of 91 percent, and this building has a history of being able to keep its occupancy very high, which has historically hovered around 94 percent.
“We celebrated our eleventh anniversary in July and are continuing to grow and expand in our target West Coast markets. 1111 Broadway has been one of the best performing assets in Oakland since it was built, and we’re excited to add this marquee building to our expanding East Bay portfolio,” said Christopher Peatross, President of Swift Real Estate Partners in a prepared statement.
During the time that Swift was in talks to buy the property, it was was already in discussions with existing and new tenants about leasing space in the property. Several new leases have recently been completed. The in-place rents in the property were around 20 percent below market rates, according to estimates. Swift expects to have the property hit the high 90 percent occupancy level in the very near term. Some of the current tenants in the property include Wendel Rosen Black & Dean, Merrill Lynch, HNTB and a number of construction firms, according to the property’s website.
1111 Broadway is located in the middle of Oakland’s central business district. The 24-story Class A office building has a total of 565,877 square feet. It is situated in a strong mass transportation location as the property is atop the 12th Street BART Station.
Swift has purchased the property for Swift Real Estate Partners Fund III. The fund manager projects that 1111 Broadway will make up around 20 percent of the total portfolio of the commingled fund. Fund III had a final close in March of 2020 with over $500 million of equity commitments and a total of $1.4 billion of buying power.