Rockwood JV buys vacant Silicon Valley office campus

A joint venture led byRockwood Capital has made a value-added investment, acquiring a vacant 500,000-square-foot Silicon Valley property.  According to a statement released by the White Plains, New York private equity real estate firm, the venture bought the former shopping centre-turned-office campus for $90 million.

Rockwood is partnering with Silicon Valley developer Four Corners Properties to acquire the asset, which is situated on a 27-acre site on the border of Mountain View and Palo Alto, from homebuilder William Lyon Homes. The property, located at 100 Mayfield Avenue, will be renamed San Antonio Station. Cornish & Carey Commercial Newmark Knight Frank represented Rockwood and Four Corners in the transaction.

Although representatives from Rockwood declined to comment on the firm's fundraising activities, sources familiar with the situation have revealed that the asset was purchased on behalf of Rockwood Capital Real Estate Partners VIII, which closed on $964 million of equity in 2009 and is almost fully invested. Rockwood will be the majority owner of San Antonio Station, sources added.

Originally constructed in 1966 as a shopping centre called the Mayfield Mall, the property became the first enclosed air-conditioned shopping centre in northern California. Technology firm Hewlett-Packard purchased the property in 1986 and converted the mall into an office campus. 

In October 2011, William Lyon, which develops residential communities in California, Arizona and Nevada, purchased the property. Various media reports revealed that William Lyon filed for Chapter 11 bankruptcy protection in December 2011with plans to cut its debt by roughly $180 million. In February 2012, the firm emerged from its voluntary pre-packaged Chapter 11 reorganisation. 

Rockwood and Four Corners Properties plan to renovate the campus, upgrading the buildings to Class A office space. Bob Gray, a partner at Rockwood, said in a statement: “Revitalizing the former Mayfield Mall, which is proximate to transit, housing and retail, is one of the ‘greenest’ forms of investment our firm can make.” 

Bruce Burkard, principal at Four Corners Properties, added: “We are seeing strong demand from companies that desire their own campus, but there are few, if any, quality existing structures available and the majority of new construction is not designed for a true campus environment. San Antonio Station will be ready for occupancy well in advance of new construction because we are simply renovating the existing property, which has incredible existing infrastructure.”
 
Rockwood has been on a bit of a shopping spree lately, as this purchase comes on the heels of the firm buying 1191 Second Avenue in Seattle from Tishman Speyer for $186 million. Prior to that, a venture between Rockwood and Vestar Development bought The District at Green Valley Ranch, a retail property on the outskirts of Las Vegas, for $79 million from LNR Partners in an all-cash deal late last year.

Separately, PERE previously reported that Rockwood currently is raising capital for its ninth value-added US real estate vehicle. Rockwood Capital Real Estate Partners IX is targeting $750 million in equity commitments, with a hard cap of $1 billion. Fund IX primarily will target hotels, offices, residential and retail properties throughout the US with a focus on California and the Boston-to-Washington corridor. The firm is seeking properties with steady income streams that have the potential for redevelopment.