Silicon Valley Office Campus Lands $71M Refi

CBRE has arranged the financing on behalf of Rockwood Capital and Four Corners Properties, the owners of The Junction at Montague, a four-building, 262,110-square-foot property in San Jose, Calif.
The Junction at Montague
The Junction at Montague in San Jose, Calif.

A partnership between Rockwood Capital and Four Corners Properties has received $71.5 million in refinancing for The Junction at Montague, a four-building, 262,110-square-foot, office/R&D campus in San Jose, Calif.

Brad Zampa, Mike Walker and Megan Woodring of CBRE’s San Francisco office arranged the five-year, floating-rate bridge financing at a competitive spread priced over the 30-Day LIBOR with a national mortgage REIT focused on investing in larger, West Coast value-add debt opportunities.

“At Junction at Montague, the multi-functional buildings will attract all types of Silicon Valley tenants, ideal for both office and R&D use,” Woodring, CBRE’s vice president, told Commercial Property Executive. “These available buildings range in size from 60,000 to 90,000 square feet, providing a high degree of functionality and divisibility along with the ability to grow a tenant within the project. The variety caters to a wide range of tenant demands in Silicon Valley and we believe our clients will have near-term success leasing the project.” 

The money will be used to finalize a substantial repositioning to create an open, creative office/R&D space with ample amenities, remodeling more than 65 percent of the portfolio.

The property is located on 16 acres at 2520, 2560, 2580 Junction Ave. and 541 E. Trimble Road, in the heart of Silicon Valley’s “Golden Triangle.”

Its impressive tenant roster includes Infineon Technologies AG and Avnet, one of the world’s largest franchised distributors of electronic components and subsystems.

The property’s central location provides ease-of-access throughout Silicon Valley via the region’s key freeway systems.

An Impressive San Jose Market

The joint venture originally purchased the property at the end of 2015. It’s believed that once the renovations are completed, the portfolio will be poised to capitalize on North San Jose’s transformation into both a major technology employer and an up-and-coming live-work-play area.

CBRE research reveals that the North San Jose submarket is one of the top areas for both developing companies and established Fortune 500 firms, due to the high quality of tech-focused space, its central location in Silicon Valley and the numerous new residential and retail developments coming into the area.

“Owner-users are changing the landscape of North San Jose, displacing smaller tenants and reducing available inventory from the market,” Woodring said. “Tenant demand for space in North San Jose is expected to continue causing rental rates to rise and vacancy rates to compress. Since 2011, North San Jose R&D asking rates have increased an outstanding 115.5 percent from $1.00 triple net to north of $2.25 triple net.”  

In March, Rockwood Capital acquired Growers Square, a three-building, 195,372-square-foot Class A office project in Walnut Creek, Calif.

Image courtesy of CBRE