Within two weeks of receiving city council approval to advance into a sale negotiation, Wells Fargo bank sold the Sunnyvale Town Center to an investment group led by J.P. Morgan Asset Management for $270 million, according to public records.
The news, which was first reported by the Silicon Valley Business Journal, comes after years of legal wrangling that began when Menlo Park-based Sand Hill Property Company and Deutsche Asset Management’s RREEF defaulted on a $109 million loan moving the project into foreclosure.
[contextly_sidebar id=”B1wYl8I4BNaNsnoF40Ru8mkzHrXLKNUw”]In late November, the bank had announced that it had found a potential buyer for the Town Center, a consortium comprised of Sares Regis Group of Northern California, Hunter Properties, Inc. and J.P. Morgan Asset Management. The city of Sunnyvale went into an evaluative role to assess the financial feasibility of the sale to the three-company partnership. On December 10, in a 4-3 decision, the city council approved further negotiations between the bank and the three potential buyers announcing that the new development team had met criteria outlined by the council related to development experience and financial capacity to acquire the troubled development.
“It’s hard for me to imagine a stronger set of applicants for this project. So, for those reasons I am going to be supporting the motion,” said council member Gustav Larsson, who was one of the four members that supported the motion to approve the buyers.
As The Registry first reported, the estimated cost to purchase and develop the remainder of the Sunnyvale Town Center could be as high as $550 million for the office component of the development, according to estimates provided by the city’s documents. The structure of the agreement would be such that the partnership would be comprised of two entities, one 100 percent owned by J.P. Morgan that would own the office component of the development, and another that would have a 95 percent equity stake by J.P. Morgan and the rest divided by Hunter Properties and Sares Regis that would own the retail and residential components.
The purchase agreement represents a big step forward for the new owners and developers, as well as the city of Sunnyvale. Preliminary projects have been submitted to the city for evaluation, which will take some time to get finalized and approved.
During the legal battles in the last several years, the bank’s court-appointed received worked diligently to complete two office towers in 2010 and 2012, which today are occupied by Nokia and Apple. The area has been almost entirely transformed since the Great Recession with additional office and housing developments completed in the vicinity. Caltrain’s line runs on the very edge of the development, bringing another valued benefit to the center, mass transit.