Federal Realty Investment Trust has completed the sale of an 11.7-acre segment of San Antonio Center, its 33-acre retail destination in Mountain View, Calif., in Silicon Valley. The real estate company sold the land at the 376,000-square-foot regional shopping center to the Los Altos School District under threat of condemnation.
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Federal Realty has owned San Antonio Center since 2015, having acquired the property from San Antonio Associates for $62.2 million. “We paid $62 million for the entire 33-acre shopping center at about a 6 cap four years ago. Please let that sink in, in terms of what that says about the implied land value and tech-centric Silicon Valley,” Donald Wood, CEO of Federal Realty Investment Trust, said during the company’s second quarter 2019 earnings conference call on August 2.
Originally developed in 1958, San Antonio Center serves an affluent population and was 97 percent leased to more than 30 national, regional and local tenants at the close of the third quarter. The property’s anchors include Kohl’s, 24 Hour Fitness and Jo-Ann—for now. The aforementioned retailers, along with a handful of small shops, are located on the portion of the land that Federal Realty sold to LASD. According to the LASD Board of Trustees resolution approving the San Antonio Center deal, the site consists of five parcels with the addresses of 435 San Antonio Road, 2535 California St., 350 Showers Drive, 506 Showers Drive and 510-520 Showers Drive.
The affected retailers will vacate their respective stores, accounting for a total of approximately 190,000 square feet of space, for which they will receive condemnation awards of a yet-to-be-determined amount from Federal Realty’s asset sale proceeds. LASD plans to erect a public school on the newly traded San Antonio Center site. In addition to academic buildings and facilities, the school property will feature a 2-acre community park, as well as 4 acres for athletic fields, playground structures and recreational facilities.
Deep in the valley
A leading player in the major coastal markets of the U.S., Federal Realty has a strong presence in California, including a notable footprint in Silicon Valley, which is thriving across the board. “There are a few areas in this country where economic activity is simply off the charts. Obviously, Silicon Valley is one of them,” Wood said during the conference call. The company continues to strengthen its position in the market. Earlier this year, Federal Realty announced the launch of Phase I at Santana West, a 360,000-square-foot office tower across from the company’s mixed-use Santana Row property in San Jose. And as noted in its third quarter report, Federal Realty purchased a 6,000 square-foot retail building adjacent to San Antonio Center for $6.5 million in September.