The Mercury News Weekend

Major investors purchase Palo Alto complex

Drawbridge, KKR-linked group buys retail, office site

- By George Avalos gavalos@bayareanew­sgroup.com Contact George Avalos at 408-859- 5167.

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.

 ?? BLOX VENTURES ?? First Republic Center is a retail complex located at 2100 El Camino Real in the College Terrace section of Palo Alto.
BLOX VENTURES First Republic Center is a retail complex located at 2100 El Camino Real in the College Terrace section of Palo Alto.

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