Long Wharf Sells Cupertino, Buys SoMa
Submitted February 1, 2012, 1:06 PM
A Boston-based private equity real estate manager has closed a Cupertino property sale and completed an investment in San Francisco’s hugely popular South of Market in what company executives hope will be only its first Bay Area investments.
Long Wharf Real Estate Partners LLC sold the more than 102,000 square-foot Cupertino Crossing office building for $43.5 million in December. According to industry sources, the company acquired the property in July 2010 for $21.2 million.
Located at 10900 N. Tantau Ave., Cupertino Crossing is next door to the proposed 3.1 million square-foot headquarters campus that Apple is now pursuing through the city of Cupertino.
Panasonic has six years remaining on its lease, while Apple has a decade, said Jeffrey Gandel, a managing director with Long Wharf.
The quality of those tenants and the remaining lease terms led to strong demand from institutional buyers, he said. “We are a value-added investment manager, and we had made our improvements to the property and wanted to get rewarded for the increased value,” Gandel said.
The buyer of the property was Alecta Real Estate Investment LLC, a Swedish pension-fund advisor with an office in downtown San Francisco at Four Embarcadero Center. Martin Van Ardenne, the U.S. portfolio manager for Alecta, did not return phone calls seeking comment.
Tantau Investments LLC, a joint venture that includes Silicon Valley’s Ralph Borelli of Borelli Investment Co. and Larry Wallerstein of Advantage Real Estate Solutions, developed Cupertino Crossing in 2009. Its core and shell were built to LEED Silver standards.
Meanwhile, Long Wharf has acquired a nearly 50 percent interest in 140 Second St. in San Francisco, a South of Market building bought in October by Christopher Peatross’s Swift Realty Partners. Long Wharf paid $3 million to gain its ownership interest. Swift bought the 36,000 square-foot property for $12.3 million, according to Jones Lang LaSalle.
“We always had the idea in our minds that Long Wharf might want this deal even though it was on the small side for them, “ Peatross said. “It’s our thinking that now that we have joint-venture documents in place that we could do additional investments together in the future.”
When Swift Realty bought 140 Second St. it was 71 percent occupied. Since then, the landlord signed a 5,500 square-foot lease with Stripe Inc., a startup technology company that had been located in Palo Alto. The lease runs for another four years and pushes occupancy in the building to 85 percent. Swift expects to lease the building fully by mid-year to one more tenant.
Long Wharf bought both the Cupertino and San Francisco buildings on behalf of its Fidelity Real Estate Growth Fund III, a commingled value-add investment vehicle formed in April 2008 with a total equity raise of $875 million. One of the investors in the fund with a $30 million commitment was the Orange County Employees Retirement System. That fund is now fully invested, and Long Wharf expects to begin marketing its next commingled fund soon.
“It’s our intent that we will be a player in this (Bay Area) market in the future given the success we have had with our properties,” Long Wharf’s Gandel said.
Long Wharf has aggregate committed capital of $1.5 billion from 60 institutional investors, according to its Website.
