The Mercury News Weekend
Major investors purchase Palo Alto complex
Drawbridge, KKR-linked group buys retail, office site
PALO ALTO >> A real estate group headed by bigtime investors in New York City and the Bay Area has bought a prominent grocery, retail and office complex in a choice section of Palo Alto for nearly $104 million, according to property documents.
An affiliate connected to KKR, a major private equity firm, and Drawbridge Real Estate, bought First Republic Center at 2100 El Camino Real in Palo Alto, documents filed on Dec. 30 with officials in Santa Clara County show.
The buyers paid $103.6 million for the mixed-use center, the county records show.
The principal tenants in the complex, which totals 58,000 square feet, are a regional office of First Republic Bank and a just- opened specialty grocer called Real Produce International Market he buyers, operating through affiliate KRE El Camino Real Owner, obtained a $60 million loan from DBR Investments, a New York City-based subsidiary of Deutsche Bank, the global financial serv ices behemoth, Santa Clara County property documents show.
Investors appear to hunger for Palo Alto buildings in a big way. The deals suggest that Silicon Valley commercial real estate remains a hot ticket even in the face of coronavirus-linked economic uncertainties.
Among the major transactions for Palo Alto properties this year:
• On Dec. 17, a group headed by Harrison Street and Bioscience Properties paid $72.7 million for six research and office buildings at and near the corner of Embarcardero Road and Embarcadero Way.
• On Dec. 4, Harrison Street paid $123 million for a building at 3380 Coyote Hill Road in prestigious Stanford Research Park that’s fully leased to VMware.
• In October, Alexandria Real Estate paid $40.5 million for two office buildings on Hillview Avenue near Arastradero Road in Stanford Research Park. Two months earlier, Alexandria Real Estate paid $115.2 million for an office building totaling 100,000 square feet on Porter Drive in Stanford Research Park.
The just- completed purchase of First Republic Center on El Camino Real represents a major success story — and profit — for the sellers, a venture of Palo Alto-based developer Blox Ventures and New York City-based realty investment firm Angelo, Gordon & Co.
In 2018, Blox and Angelo, Gordon teamed up to pay $78.3 million in cash for the complex. The latest price for the complex points to a 32% gain in the value of the property since it was previously purchased.
One of the major successes of the sellers was landing a well-respected grocery operator to fill a long-vacant space on the ground floor of the complex.
“The partnership worked to ensure long-term leases with its tenancy for the future success of the property and the businesses,” Blox and Angelo, Gordon said in comments describing their efforts ahead of the property purchase.
Real Produce International Market in November leased 11,000 square feet in the Palo Alto complex.
“It has always been our goal to thoughtfully improve this asset to best serve the community and ensure the buyer shares the same commitment,” said Jason Oberman, chief executive officer of Blox Ventures.