Debt-stricken California and its governor, Arnold Schwarzenegger, had reason to smile in May after broker Richard Ellis received hundreds of offers for part of the state’s real estate. According to industry resource Commercial Property Executive, CBRE received roughly 300 offers totaling more than $2 billion to purchase and lease back 11 state office properties on behalf of the California Department of General Services.
The office buildings, which were put on the market in February, total nearly 7.3 million in rentable square feet and are located in Los Angeles, Oakland, Sacramento, San Francisco and Santa Rosa. A deal for the office portfolio would allow California to pay off some of its massive debt load and lock in some extremely low interest rates, DGS acting director Ron Diedrich told CPE.
The state expects to gain roughly $1 billion from a potential sale-leaseback deal – hardly a substantial bailout considering California’s budget deficit is somewhere in the $20 billion range. Still, a lucrative commercial real estate opportunity is probably the only silver lining in the Golden State’s troubled economy.