By Jon Peterson
The Office of the University of California Regents is planning to pay approximately $380 per square foot or $215.1 million to acquire the 566,168 square foot 1111 Broadway office building in downtown Oakland, according to sources familiar with the property.
A representative of the office of the chief investment officer for the UC Regents did respond in an e-mail that the university hopes to acquire the property and that the deal has not closed yet. The email stated that the buyer was not in a position to discuss any pricing details.
This sale would result in a big profit for San Francisco-based Ellis Partners. Ellis, with the help of Newport Beach-based equity partner PIMCO, had acquired the property for $158 million or $279 per square foot in November of 2013. Jim Ellis, managing principal with Ellis Partners, declined to comment in an email when contacted for this story.
The UC Regents sees 1111 Broadway as a core asset. The potential buyer stated in an e-mail that it considers the property to be a core asset due to its proximity to the core of downtown Oakland, giving it exceptional conveniences to restaurants, retail and hotel amenities, as well as outstanding accessibility to BART, multiple bus lines and highways 980 and 880. Over the years of various ownerships, the building has been maintained to the highest institutional standards and has historically commanded the highest rents in its submarket.
The UC Regents believes in the Oakland office building market. It stated in an e-mail that Oakland as a city is poised for significant near term rent growth and strong absorption if the city continues to thrive and drive economic expansion.
1111 Broadway, which was first developed in 1990, is now 96 percent leased. Major tenants in the property include Wendell, Rosen, Black & Dean, GT Nexus and FEMA. The University of California also occupies a floor in the building. The asset is a LEED certified gold office tower.
This property could become part of UC Regents existing real estate portfolio now valued at $3.5 billion, according to an e-mail from the investor. This portfolio includes a mixture of core, value-add and opportunistic private real estate it has invested in the United States and around the world.
These investments are placed into a mixture of commingled funds and separate account investment strategies. The UC Regents manages a total investment portfolio value at around $91 billion. This includes retirement, endowment, working capital and defined contribution pension plans.