Shorenstein Properties has put two of its Class A office buildings in Redwood City, California – one of them subleased to DreamWorks Animation SKG – on the market. The sale is all part-in-parcel with the San Francisco-based real estate investment firm’s strategy of cashing out its fully leased, core assets.
The properties, located at 1400 and 1500 Seaport Boulevard, are 100 percent triple-net leased to Chicago-based pharmaceutical firm Abbott Laboratories through December 2021. DreamWorks Animation, the Glendale, California-based studio behind the animated films Shrek and Kung Fu Panda, subleases a majority portion of 1400 Seaport as its northern California campus, co-terminus with Abbott’s master lease.
According to Jones Lang LaSalle, which has been hired to market the waterfront properties, the two, five-storey buildings comprising a total of 447,747 square feet are to be sold together.
“This property comes to market at a time when core deals in gateway markets are attracting a tremendous amount of investor interest, particularly in North America,” said Jones Lang LaSalle managing director Paul Lee, who is on the team marketing the assets. “Investors' hunger for yield in this low interest rate environment has favoured centrally-located core office investments in leading markets, most notably San Francisco.”
The buildings were completed in 2002 as part of the Pacific Shores Center, a 10-building, 1.7 million-square-foot office development. Shorenstein, which purchased the properties in 2007 on behalf of its Shorenstein Realty Investors VIII fund, acquired the assets as part of what The San Francisco Chronicle at the time called a “buying binge.” Indeed, the firm scooped up more than five million square feet of properties in not only Redwood City, but also Portland, Oregon and Burbank, California, in the span of roughly one month.
A report by The San Francisco Business Times has revealed that Shorenstein paid $245 million, or roughly $540 per square foot, for the two Redwood City properties. Sources familiar with the situation expect the assets to attract bids of more than $550 per square foot this time around.
Abbott has invested more than $400 per square foot in lab improvements in 1500 Seaport. Meanwhile, DreamWorks currently is investing more than $100 per square foot into its sublease space at 1400 Seaport. Among the improvements DreamWorks is bringing to its space is a screening room.