Wafra Investment Group Buys First Bay Area Asset in San Mateo for $95MM

Wafra Investment Advisory Group San Mateo New York Life JLL San Francisco Peninsula Cornerstone Real Estate Advisors Cushman & Wakefield Bay Area


By Jon Peterson

New York City-based Wafra Investment Advisory Group has acquired the 187,372 square foot 777 Mariners Island Blvd. office building in San Mateo for approximately $95 million or $507 per square foot, according to sources familiar with the transaction.

[contextly_sidebar id=”1xDorABKiOUyjb5lYS8hfW9SiUXYJveV”]This investment will be the buyer’s first ever real estate acquisition in the San Francisco Bay Area. Wafra did not respond to phone calls seeking comment for this story.

Around 50.5 percent of the acquisition was covered by a loan provided by New York Life. This $48 million acquisition loan was arranged by JLL’s Capital Markets team in its San Francisco office. The debt has a seven-year time frame with a fixed interest rate.

“We had very strong interest in providing debt for this property. There seems to be a number of lenders that have an interest in providing debt for high quality assets on the Peninsula. The property itself is a strong asset where the seller had made some significant upgrades to the property over the past couple of years,” says Alex Witt, an executive vice president with JLL in its San Francisco office. He and Managing Directors Alexandra Bryant and John Manning led the JLL team on the transaction.

The seller of the property was Hartford, Conn.-based Cornerstone Real Estate Advisors. The company had acquired the property in November of 2013 for $63 million or just over $336 per square foot. The real estate investment manager sold the property through the San Francisco & Burlingame offices of Cushman & Wakefield in its Northern California Capital Markets team. The listing agents in San Francisco were Adam Lasoff, Seth Siegel and George Eckard, and Managing Principal Mike Moran and Senior Managing Director Clarke Funkhouser in the Burligame office worked on the transaction.

There is going to be a value-add investment opportunity for the new owner. “With rents nearly 30 percent below market rates and Bay Area office vacancy near historic lows, 777 Mariners Island Boulevard represented a prime opportunity for Wafra,” said Witt.

The current occupancy of the property is in the range of 89 percent to 90 percent. The asset will likely become fully stabilized with another one or two new leases signed for the property. Two of the existing tenants in the property are Keynote Systems and IXL, an online learning company. The property includes an updated fitness center, auditorium and a community rooftop space.

Wafra Group is known as a long-term holder of its real estate assets. According to its Web site, the company is an owner of office, retail and apartments in a variety of markets around the country. This includes Carmel, CA, Florida, Texas and New York.

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