Clarion Partners Nabs $60M Loan for California Office Complex

Clarion Partners, owner of the 338,700-square-foot Plaza at Walnut Creek office complex in suburban San Francisco, just obtained a $60 million permanent loan for the two-building property.

By Barbra Murray, Contributing Editor

In the office sector, the right asset in the right location can catch lenders’ attention, and Plaza at Walnut Creek has done just that. Clarion Partners, owner of the 338,700-square-foot office complex in the suburban San Francisco town of Walnut Creek, just obtained a $60 million permanent loan for the premier two-building property.

Commercial real estate services firm Holliday Fenoglio Fowler L.P. arranged the financing on Clarion’s behalf, securing the fixed-rate loan from Cornerstone Real Estate Advisers. Chris Gandy, associate director with HFF, told Commercial Property Executive, Plaza at Walnut Creek has what it takes, particularly in the all-important category of location. “These downtown buildings are within walking distance of Broadway Plaza — which is a big outdoor mall — and Main Street, so you have access to the amenity base,” he said. “On top of that, they’re Class A buildings near the BART station.”

Plaza at Walnut Creek is a magnet for creditworthy office users, a factor that is also appealing to lenders. The likes of Comerica Bank, Merrill Lynch, Morgan Stanley and US Bank grace the tenant roster, which is roughly 90 percent full. The occupancy level at the two seven-story structures, developed in 1987, has historically held steady in the 90-percent range, Gandy noted. The total vacancy rate for Class a properties in the Downtown Walnut Creek submarket was 18.6 percent in the first quarter of this year, according to a report by commercial real estate services firm Jones Lang LaSalle.

Plaza at Walnut Creek ticked all of the requisite boxes, attracting financing with, as Gandy recapitulated, “The quality of the buildings, the position of the asset, the investment grade tenancy and the historical occupancy.”

Indeed, the capital markets have warmed up to the office sector in metropolitan San Francisco. “In the Bay Area, we’ve seen a lot of activity within the office market in the last 12 to 18 months,” he added. “On quality assets at lower leverage, you see life companies come into play, which was the case with this property, but we’ve also seen conduits, banks and bridge lenders be very active in the Bay Area, depending on the profile of the deal.”

Things are looking up for office assets on a national level as well. In reporting the results from a recent survey, services firm Jones Lang LaSalle Inc. forecasted “a much bigger expanse in lender distributions, as competition is stiff for lenders to lend to multifamily and they’re branching out further to office and true grocery-anchored retail centers.”