California office portfolio for sale

Real Estate Alert, June 23, 2004

A joint venture between Principal Financial and Government of Singapore Investment is marketing three suburban office properties in California.

The 424,000-square-foot portfolio could fetch roughly $90 million, or $215/sf. At that price, the buyer's initial annual yield would be about 7.5%. The properties are being pitched as a portfolio, but can be purchased separately. Cushman & Wakefield has the listing.

The joint venture, called Principal Office Investors, bought the properties in 1999 for $75.9 million via separate transactions.

The larger transaction involved two Northern California office buildings: the 196,000-sf Olympus Corporate Center in the Sacramento suburb of Roseville, and the 114,000-sf Golden Gate Plaza in the Marin County community of Novato. The Principal team bought the two properties for $50.9 from a joint venture between of AEW Capital Management of Boston and Basin Street Properties (then known as G&W Management) of Petaluma, Calif.

The four-building Roseville property, at 3001-3013 Douglas Boulevard, is part of a 638,000-sf campus off Interstate 80, north of Sacramento. The occupancy rate is 87%. The tenants include Charles Schwab, UBS, Washington Mutual and Wells Fargo. Asking rents are $25.25/sf. The property was developed in 1991.

The two-building Novato property, at 100-101 Rowland Way, was built in 1993. The property, off U.S. Highway 101, is 85% occupied, with asking rents of up to $27/sf. Tenants include eGain Communications, a high-tech firm that is a subsidiary of software provider Inference Corp., and software company Sonic Solutions.

The third property in the offering is the 114,000-sf building at 4590 MacArthur Boulevard in the Orange County community of Newport Beach. The Principal team bought it from Aetna in 1999 for about $25 million. The six-story reflective-glass building is 85% occupied, with asking rents of $25.80/sf. Tenants include Palace Entertainment and Premiere Business Centers, which each lease 17,000 sf under long-term leases. Wells Fargo recently exercised a five-year extension option for its 9,000-sf lease.

Cushman beat out CB Richard Ellis and Secured Capital, among others, for the listing.