March 16, 2016
Los Angeles-based Vista Investment Group has paid $35.38 million to acquire the 167,000 square foot Silicon Valley Business Park in San Jose at the intersection of Zanker Road and Charcot Avenue, according to sources familiar with the transaction.
The new owner declined to comment on the purchase price as it signed a non-disclosure agreement with the seller, San Francisco-based Prologis. The previous owner of the property sold the property through the San Jose office of CBRE. The listing agent on the sale was Joe Moriarty, executive vice president with CBRE. He did not respond to e-mails seeking comment for this story.
Even though the property is 100 percent occupied, Vista still believes there is a value-add component to the property. “There are going to be some of the current tenants that come up for renewal over the next three years. In some cases the current rents are 50 percent below market. We think we can keep these tenants at market rates or bring in new tenants to the property,” says Jonathan Barach, president with Vista Investment Group. The new owner of the complex is planning to make some improvements to the property going forward. “We will be spending from $1 million to $2 million on the exterior of the property. This will include new landscaping and to make the property friendlier to tech office tenants. The property will also be re-branded and we will come up with a new name for the property. There will also be additional capital spent on the interior for tenant improvements,” said Barach.
The property was acquired with a combination of cash and debt. There was a $26.2 million acquisition loan arranged by CBRE Capital Markets’ Debt & Structured Finance team in its San Francisco office. The people involved with this were Brad Zampa, Michael Walker and Megan Woodring. This loan covered 65 percent of the acquisition cost of the property. It will last for five years.
This property is located in a growing area. “The business park is located in the Golden Triangle sub-market which is in the midst of a technology-company fueled renaissance. Over the past 12 to 18 months, leasing and sales activity has erupted from developing companies as well as Fortune 500, investment grade tenants,” said Zampa.
Vista owns other properties in the San Jose region. These include a single-tenant office property on North First Street and an apartment complex in San Jose. These are the two property primary types that in which the company is looking to invest. San Jose is where it wants to buy assets in for Northern California, and the company is focused only on value-add assets.