Glendale, Calif. — PS Business Parks (PSB) has acquired a 5.3 million-square-foot industrial portfolio of properties located in Northern California for $520 million. The seller was RREEF America REIT II Corp. and its affiliate, Northern California Industrial Portfolio Inc. Included in the portfolio are 18 multi-tenant business parks totaling 2.9 million square feet of light industrial space and 2.4 million square feet of flex space.
“This portfolio acquisition significantly enhances PSB’s presence in Northern California, providing a strong concentration of parks in markets that are poised for continued recovery,” said Joseph Russell, Jr., president and CEO of Glendale-based PSB. “PSB has a deep understanding of these markets and we are confident their economic strength and stability will provide opportunities to great value from this unique opportunity.”
The properties are located in the Bay Area, with concentrations in Oakland, Hayward, Fremont, Milpitas, San Jose, Santa Clara and Sunnyvale. The portfolio is approximately 82.2 percent leased to 216 tenants. Following the acquisition, PSB now owns 7.2 million square feet of multi-tenant industrial and flex space in 30 business parks in Northern California, or 26.3 percent of the company’s portfolio.
In conjunction with the transaction, the company assumed a $250 million secured loan, which has a fixed interest rate of 5.45 percent and matures in December of 2016. Additionally, the company entered into a 3-year unsecured term loan for $250 million with Wells Fargo Bank, which has an interest based on LIBOR plus 1.2 percent. The balance of the funds for the acquisition came from retained cash and the company’s credit facility. Additionally, approximately 2.8 million in third-party costs were incurred as a result of the transaction.
“With its strong market concentration and occupancy upside, this acquisition is in many ways similar to PSB’s 2003 acquisition of Miami International Commerce Center, where we were able to leverage our operational experience to exceed market occupancy,” continued Russell. “We anticipate having a similar opportunity with this portfolio.”
— Savannah Duncan