Hines, Oaktree Buy 515 KSF San Francisco Bay Office Campus

The partners acquired Ygnacio Center, a three-building property in the East Bay’s coveted Walnut Creek market, from LaSalle Investment Management.
Ygnacio Center
Ygnacio Center

Hines recently joined forces with a subsidiary of real estate funds managed by Oaktree Capital Management LP on the acquisition of the premier Ygnacio Center office campus in the East Bay region of the San Francisco Bay Area. The partners acquired the approximately 515,000-square-foot property from LaSalle Investment Management.

Hines hasn’t publicly disclosed the sale price of the asset. However, according to a June 2018 San Francisco Business Times article, the partners agreed to pay roughly $221 million for the asset, which last traded in 2016 for $158 million.

Ygnacio Center consists of One, Two and Three Ignacio Center. The buildings, developed between 1974 and 2002, span an entire city block just across from a BART station, in Walnut Creek’s coveted downtown submarket. “Given the quality of the location and the solid market fundamentals, we believe this is a strategic acquisition for our portfolio,” George Clever, a senior managing director with Hines, said in a prepared statement.

Hines and Oaktree plan to reposition Ygnacio Center via a capital investment program that will include, among other upgrades, the addition of an 8,200-squrae-foot amenity center.

High on the radar

The Walnut Creek office market is garnering an increasing amount of attention. “In the third quarter of 2018, sale activity skyrocketed, catapulting the East Bay Walnut Creek office market into the spotlight of investors,” according to a report by commercial real estate services firm Cushman & Wakefield.

Recent office transactions in Walnut Creek include Jamestown LP’s $118 million acquisition of 2000 and 2001 Clayton Road, two towers totaling 619,500 square feet. Partners Group AG purchased 1655 and 1755 Grant St., consisting of 497,600 square feet, for $146 million. And earlier this year, Rockwood Capital snapped up Growers Square, an approximately 195,400-square-foot office project, in a $95.5 million deal. Per the Cushman & Wakefield report, “As properties in the East Bay Walnut Creek office market change ownership, asking rates will continue to increase.”

 Image courtesy of Hines