A joint venture between Lone Star Funds, Grove Real Estate Partners and TMG Partners acquired a 2.2M SF portfolio of specialized research and development properties spread across 50 buildings and 140 acres in San Jose, Santa Clara and Milpitas.
The firm spent roughly $650M on the properties, The Mercury News reported.
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The JV purchased the assets on six campuses from Seattle-based Washington Holdings. The portfolio lies within Silicon Valley’s Golden Triangle, formed by the intersections of Highways 237 and 101 and Interstate 880. The area is home to burgeoning physical artificial intelligence and robotics companies such as Figure AI, as well as corporate headquarters or major facilities for Nvidia, Cisco, Amazon, Samsung, Oracle and Intel.
“We see significant opportunity in this portfolio given the strong tailwinds across the business landscape right now in Silicon Valley,” Lone Star Global Head of Commercial Real Estate Jérôme Foulon said in a statement. “We have a high level of conviction in the resurgence of the San Francisco Bay Area, and the purpose-built nature and mix of capabilities in this portfolio will be immediately attractive to tenants who need advanced, turnkey facilities.”
According to the Silicon Valley Business Journal, the properties include:
-500K SF at Mission Park R&D, a 12-building campus on 33 acres in Santa Clara
-251K SF at Montague Square, a six-building campus on 15 acres at Montague Expressway and North First Street
-295K SF at Montague Oaks, an eight-building campus on 18.5 acres in San Jose
-142K SF at Zanker Place, a four-building campus on 9.4 acres in San Jose
-266K SF at North First at Orchard, a six-building campus on 17 acres in San Jose
-736K SF across 14 buildings and 47 acres at Tasman Tech Center in Milpitas
Lone Star said in a press release it plans to upgrade the properties, with TMG and Grove operating the portfolio.
“This specialized infrastructure includes advanced modifications related to power, HVAC, labs, clean rooms and loading facilities, tailored to the unique needs of tenants,” the statement said.
Occupancy across the portfolio is 87%, the buyers told the Business Journal, which mirrors the occupancy rate among Silicon Valley R&D properties. There is roughly 21.4M SF of dark R&D space in Silicon Valley, according to Cushman & Wakefield.
It is the second Bay Area investment this year for Lone Star. In January, Lone Star acquired the mortgage secured by 600 California St. in San Francisco. The 20-story, Class-A office tower of 360K SF had a distressed loan totaling $240M, which Lone Star purchased for $130M. Lone Star and Harvest Properties in May formed a JV to recapitalize the asset.
Washington Holdings, meanwhile, continues to shed assets in the South Bay. In April, the company divested a fully leased, 375K SF tech park in San Jose for $164.3M, and in June, it sold four buildings in the Mission Park office complex in Santa Clara for $32.9M, the Business Journal reported.
CORRECTION, SEPT. 8, 9:51 A.M. PT: This story has been updated to correct the purchase price of the portfolio.
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