10-11-2013 09:20 PM

Menlo Equities/Rockwood sell Riverbed building for $94M


525 Almanor Ave. in Sunnyvale includes land for an expansion project.




Investors are showing no letup in their appetite for fully leased, Class A office buildings in strong Silicon Valley submarkets.
In the latest high-profile property trade, an affiliate of Invesco Real Estate has purchased 525 Almanor Ave. for around $94 million, or $566 per square foot, according to knowledgeable market sources. The 166,000-square-foot property on 6.1 acres is entitled for another 75,000 square feet of office space.
The property, which was owned by a joint venture of Menlo Equities and Rockwood Capital, is fully leased to Riverbed Technologies and Fiserv Inc.
The deal is the latest sign of strong interest in Sunnyvale's office market among institutional investors, especially for core assets. For example, last month, CommonWealth Partners paid $620 per square foot, or $263.3 million, for Sunnyvale Office Park. The North Mathilda Avenue project is fully leased to Juniper Networks, according to The Registry.
The two transactions are expected to achieve a similar cap rate, or initial yield, just shy of 6 percent, according to market sources.
Invesco Real Estate manages $53.2 billion of real estate investments as of June 30. Invesco representatives did not return calls.
"There's been a lot of money sitting on the sidelines, and we don't have much that was built in the last cycle," said Jones Lang LaSalle broker Erik Doyle, who marketed the property with colleagues Will Connors and Ben Bullock. "You don't have that many options to buy. And Silicon Valley is one of the best markets for good, institutional-level investment product."
The Invesco acquisition marks an exit for Menlo Equities and Rockwood, which delivered the project just as the economy tanked in 2009.

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Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.


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