(EDITOR’S NOTE: According to public documents, the vertical ventures purchased the building from Guggenheim Property for $36,200,000; the sale closed on February 24th, 2017.)
Silicon Valley Office Deal Validates Alternative to Institutional Capital
WALNUT CREEK, CA (February 24, 2017) – Vertical Ventures LLC, a leading investor, owner and operator of commercial real estate assets recently announced the acquisition of Hellyer Oaks Technology Park, a 346,065-square-foot, two-building office campus in San Jose, CA. The deal was noteworthy, not just for the quality of the asset, but also for the remarkable way in which Vertical Ventures funded the project. The equity portion of the Hellyer Oaks deal, approximately $10 million worth, was funded entirely by over 170 individual investors, the majority of which were sourced and executed online through CrowdStreet, a commercial real estate investment platform.
Vertical Ventures is a believer in the future of South San Jose. “The project’s location, access to transit, ample parking, and proximity to abundant new housing and retail amenities are all valuable attributes which tenants really appreciate” said Christopher Aust – head of Acquisitions for Vertical Ventures. Situated four exits south of Downtown San Jose on Silicon Valley’s major North/South arterial, the property’s location also benefits greatly from a reverse commute traffic pattern. “Because of this location – just south of downtown, a tenant in this project can literally save hours each week not stuck in gridlocked traffic, as is so typical in most of Silicon Valley today” added Aust.
The south San Jose submarket has traditionally been one of large users, with few or no options for small and medium-sized tenants wanting Class A space. Building on recent leasing momentum, Vertical Ventures plans to offer newly-built-out spaces from 10,000 to 60,000 square feet in order to satisfy the growing demand from that size segment. “Sky-high rents in most other Silicon Valley submarkets are causing some tenants to search for better value in their occupancy costs” said Hamid Rezapour, founder and CEO of Vertical Ventures. “Given all of the recent housing and retail development nearby, along with office rents that are literally one half of what they are in some submarkets to the north, we believe that this project provides a compelling value proposition for many tenants.”
Vertical Ventures typically joins with institutional equity partners to make its’ investments. In a first for the firm, they opted in this case to engage with the real estate crowdfunding platform CrowdStreet.com in order to raise a portion of the required equity. “This is a game changer for us and, arguably, the industry.” said Rezapour. “With CrowdStreet’s platform we were able to access institutional levels of equity capital without the traditional restrictions that accompany institutional capital. This new paradigm allows us to target certain deals in which we have great conviction, but that may fall outside of the guidelines of an institutional investor’s investment directives.”
Using CrowdStreet’s platform, Vertical Ventures was able to digitize the offering for the Hellyer Oaks investment and make it available to investors across the country both via the CrowdStreet Marketplace as well as across CrowdStreet’s network of established online advertising partners. Interested parties could review the full details of the Hellyer Oaks offering, submit an offer and sign Vertical Ventures subscription documents entirely online. Using this process, Vertical Ventures was able to acquire over 140 new investors for their project. Post-fundraising, Vertical Ventures will now use CrowdStreet’s powerful CRM and investment management tools to automate the ongoing management, communications and reporting of their new network of investors.
“CrowdStreet enables commercial real estate firms to directly access and manage institutional levels of investment capital using a process that is fast, easy, and secure.” said Tore Steen, CEO of CrowdStreet. “CrowdStreet is unique in that we don’t just give firms access to equity capital, we also provide them with the software platform needed to acquire large numbers of individual investors and then manage them through the life of that project or fund.”
“Our experience with raising equity through CrowdStreet was exceptional” added Rezapour. “I think our experience here is proof that crowdfunding can be a legitimate source of equity capital for institutional real estate acquisitions.”
About Vertical Ventures
Founded in 2004, Vertical Ventures is an established, highly-focused investor, developer and operator of institutional quality commercial real estate assets. The firm concentrates on identifying, acquiring and revitalizing well-located, quality projects that are temporarily undervalued. Our primary focus is on office, R&D and industrial properties in well-established, supply-constrained, submarkets in Northern California. The professionals of the firm average nearly 20 years’ experience transacting and operating real estate and generating attractive investment returns from both institutional and entrepreneurial platforms. Investments are made on a direct and joint-venture basis, in collaboration with select institutional and high-net worth individuals and family offices. The unwavering goal of the firm is to extract unrecognized value from the real estate and maximize returns to its investors, while providing a high level of service and communication to our financial partners.
Founded in 2013, CrowdStreet provides real estate investment firms with technology solutions that significantly accelerate fundraising and streamline investor management, communications & reporting. CrowdStreet Marketplace enables sponsors to capitalize deals by providing online access to a national audience of accredited investors. CrowdStreet’s white-label software, Sponsor Direct, enables sponsors to use the same technology powering the CrowdStreet Marketplace to create their own online investment platform on their own website.