The Admiral Admires Silicon Valley

By Jon Peterson

San Antonio-based Admiral Capital Real Estate Group, the spawn of former NBA basketball great David Robinson, has acquired its first Silicon Valley and San Francisco Bay Area property, buying 4500 Great America Parkway in Santa Clara.

4500 Great America Parkway Santa Clara The Registry real estateThe 75,000-square-foot office building is near the rising 49ers football stadium, but its location in the path of expanding employment was the compelling factor for the buy, said Daniel Bassichis, managing partner with Admiral Capital. “In general we are looking for assets that are in the flight path for growth from a jobs-migration basis, and we think that Santa Clara fills that requirement. We also are looking for value-add investment plays, which this property is,” he said.

The company plans a recapitalization and renovation with joint-venture partner, Campbell-based South Bay Development Co.

Bassichis, formerly of Goldman Sachs, and David Robinson, a Hall of Fame basketball player who played for the San Antonio Spurs and the U.S. Naval Academy, co-founded Admiral Capital in 2007. Robinson’s court nickname was The Admiral, based on his service and play for the U.S. Navy.

Admiral Capital is the majority owner of the Santa Clara property; South Bay is the local operating partner. Both declined to disclose financial details of the transaction.

The property now houses one tenant, Silver Peak Systems, a software maker whose products help data move more quickly among data centers, branch offices and the cloud.

“The tenant now occupies a little over 50 percent of the building. They have been in the property for five years. We are negotiating with them to leave the building early before their lease expires,” said Jim Mair, South Bay president, chief executive and founder.

“This will allow us the chance to lease all of the space to a single, technology-oriented tenant,” Bassichis said.

South Bay hopes to start work Sept. 1 and to finish 14 weeks later. “We have all of the [city] approvals we need,” Mair said. “Rental rates for the kind of space we are creating are now at well north of $2 triple-net [a foot a month]. We will be in that range.”

Triple-net leases, often depicted with “NNN,” are those where the tenant is responsible for operation, taxes and maintenance of the building in addition to rent.

The work done to improve 4500 Great America will be substantial. “We will be bringing the property up to current standards on both the inside and outside. This will include a new façade, landscaping and the parking area,” said Bassichis. The amenities inside the building will be added once a lease with a new tenant has been signed, and the new owners can itemize their requirements.

The property was first developed in 1983. It sits on 3.72 acres and is located at Great America Parkway and Patrick Henry Drive, two blocks from a Valley Transit Authority light-rail station and the $1.2 billion Levi’s Stadium.

Admiral Capital is partially owned by San Antonio-based USAA Real Estate Company. The firms hope to be more than a one-property player in the San Francisco Bay Area. USAA now has Justin Hildebrandt, an executive director with the company, in its San Francisco office looking for more deals in the region as well as the Pacific Northwest.

Admiral Capital made its investment in 4500 Great America Parkway for its commingled fund, Admiral Capital Real Estate Fund. Investments in the fund include a $50 million contribution from USAA Real Estate and $15 million from the Teacher Retirement System of Texas. A $112.2 million equity raise for the commingled fund was concluded in July of last year. The investment period is three years, which began then.

The fund has total assets of $250 million. The fund manager is allowed to have as much as 60 percent debt on the fund, but its debt level now is much lower. The commingled fund managers want to invest in office buildings, apartments, hotels and mixed-use assets that involve retail. The plan is to buy properties, add value to them and sell after a three- to five-year holding period.

Photo courtesy of Loopnet

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