TMG Partners Lands $133M Loan for Silicon Valley Campus

The Quad. Image via Google Street View

New York Life Real Estate Investors has come through with $132.9 million in financing for The Quad, a 410,000-square-foot office complex in Santa Clara, Calif. The borrower, TMG Partners, has recently acquired the multi-structure, transit-oriented asset from JP Morgan Chase.

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Located just across from a light rail station and blocks from the 68,500-seat Levi’s Stadium, The Quad features seven two-story buildings and a host of amenities. The property, which is newly renovated, offers such extras as a sprawling outdoor courtyard, coffee shop, fitness facility and food truck court. Currently, the campus is approximately 73 percent occupied, with longtime tenant Silicon Valley Bank serving as anchor with 50 percent of the square footage for its corporate headquarters. Other names on the roster include GoDaddy, Perspecta and Knowles Corp.

New York Life was drawn to providing financing for The Quad due to the property’s potential for stabilization, given its recent upgrades, coveted list of amenities and ongoing improvements in the area. Additionally, the property’s flexible floorplates render it capable of housing a variety of tenants with varying size needs. TMG relied on Eastdil Secured to orchestrate the mortgage loan with New York Life.

Weathering the storm

The usually strong Silicon Valley office market is no match for the coronavirus-induced recession that is afoot; although, the U.S. office sector is not expected to suffer as it did in previous downturns, given that job losses have been concentrated in the retail sector so far, CBRE noted in a first quarter 2020 report. Santa Clara recorded a vacancy rate of 10.9 percent in the first quarter and saw positive net absorption of 65,500 square feet.

Looking ahead, a return to economic health in the U.S. may not be far off, which bodes well for the office sector. “The unique nature of this downturn could result in an unusually swift economic recovery that could begin as early as the third quarter of 2020,” according to the CBRE report. “Assuming the coronavirus peaks this summer in the U.S. as health officials project, the fiscal and monetary stimulus paired with pent-up private demand could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.”