Blackstone Provides Loan to Refi 59-Building Office Portfolio in Silicon Valley for $300M

By Gail Kalinoski, Contributing Editor

The existing debt on a 59-building office/R&D portfolio totaling 2.4 million square feet in five Silicon Valley submarkets has been refinanced with a $300 million loan from Blackstone Mortgage Trust Inc.

HFF secured the 4 percent, floating-rate loan with the New York City-based real estate finance company for the portfolio comprised of three business parks and 38 standalone office buildings located in Mountain View, Sunnyvale, Santa Clara, San Jose and Milpitas, Calif. The properties are what are left of a 5.3 million-square-foot portfolio purchased for $1.1 billion by RREEF, part of Deutsche Asset and Wealth Management, and another global investment manager in 2006. The current portfolio, with properties built between 1959 and 2000, is more than 80 percent leased to tenants including Apple, SanDisk, The McGraw-Hill Company, Intel and Netflix.

“This  financing was an integral component of the overall portfolio strategy, which also included the recent HFF executed sales of Park Square and Marriott Business Park in Santa Clara,” HFF senior managing director Bruce Ganong said in a news release. “The Blackstone team provided a customized financing solution that complements the portfolio strategy, and they worked tirelessly to meet our client’s condensed timeline.”

HFF represented the borrower. Joining Ganong on the HFF team were senior managing director Eric Tupler, director Chris Gandy and associates Leon McBroom and Ed Brown.

HFF also handled the sales of Marriott Business Park in Santa Clara, which was announced earlier this month, and Park Square, which closed about a month earlier. Legacy Partners, in a joint venture with AllianceBernstein U.S. Real Estate Partners, purchased the 427,000-square-foot Marriott Business Park. The business park, constructed between 1979 and 1980, includes 12 single- and two-story buildings that are 90 percent leased, according to a HFF release.

The Irvine Company bought Park Square, an office/R&D business park with 465,000 square feet also located in Santa Clara. Located on 31.1 acres, Park Square, which is about 60 percent leased, has 13 single- and two-story buildings that were constructed between 1977 and 1978, according to HFF.

Nathan Donato-Weinstein of the Silicon Valley Business Journal reported that Marriott Business Center sold for about $98.3 million and Park Square for more than $100 million.

The HFF team representing the seller of both business parks was led by senior managing director Michael Leggett, managing director Steven Golubchik and associate director John Simerlein.

HFF has played roles in several large refinancing deals this month, including the $127.5 million financing package announced last week for a 2.3 million-square-foot portfolio comprised of 37 industrial, office and retail properties in Folcoft, Pa., and Melbourne, Fla. Earlier in June, HFF secured a $581 million loan for The Blackstone Group to refinance a 16-property, 4,798-room hotel portfolio and golf course/tennis club.