Walnut Creek / Pleasanton Office space: REIT purchase
East Bay Business Journal, April 8, 2005
RREEF buys CarrAmerica, Mount Diablo Plaza next
Katherine Conrad
Investment giant RREEF plans to close escrow this month on Mount Diablo Plaza in Walnut Creek - just after buying Pleasanton’s CarrAmerica Corporate Center in a deal valued at $197.3 million.
RREEF, Deutsche Bank Group’s real estate arm headquartered in Chicago, is reported to be paying $91 million or $285 a square foot for the 319,000-square-foot Class A office complex in downtown Walnut Creek. The 20-year-old buildings changed hands two years ago for $62 million.
That deal and the one in Pleasanton, which was sealed in the final days of March, come on the heels of RREEF’s purchase last year of One Concord Center, a 350,000-square-foot tower in Concord.
“This means that the demand for investment real estate is at an all-time high, fueled by the supply of investment capital seeking real estate investments,” said Kevin Van Voorhis, senior vice president for Colliers International. “RREEF is a good owner, operator and manager of real estate, one of the best.
“(The deals) are a very strong statement about their belief in the East Bay market.”
As capital continues to flow into real estate, the competition among investors for prime properties has driven them to the secondary markets, including the suburbs. Bay Area sales volume exceeded 70 percent during 2004, according to BT Commercial Real Estate/NAI.
As RREEF expands its East Bay footprint, it also has enlarged its U.S. portfolio by closing three - more than any other investment firm - of the 20 largest property transactions in the country during the first quarter of 2005.
RREEF purchased 505 Montgomery St. in San Francisco for $121 million; LNR Warner Center in Woodland Hills for $155 million; and Riverfront Office Park in Cambridge, Mass., for $175 million.
CarrAmerica Realty Corp. received $154 million in the deal by selling 81 percent of its interest in the property to RREEF.
CarrAmerica to still manage center
CarrAmerica, which bought the 1-million-square-foot complex in 1996, will continue to manage the 60-acre campus, the largest within Pleasanton’s Hacienda business park.
With an 85 percent occupancy rate, the center is home to Ross Stores Inc., Safeway Inc., AT&T Corp., SBC Communications and Cingular Wireless.
“This is great for the market because it keeps CarrAmerica here while bringing in a huge pension fund like RREEF,” said Colliers International Senior Vice President Ted Helgans, the leasing agent for the property and a consultant in the deal handled by Secured Capital Corp. “I think it’s a good opportunity for two major players like RREEF and CarrAmerica. They make a powerful team.”
