Pruneyard Towers office complex gets major new investor, fourth tower planned
Oaktree Capital Partners to upgrade and expand project
The Pruneyard Towers office complex has landed a new majority owner and an infusion of fresh capital, which will allow the launch of a wide-ranging upgrade to the three iconic towers as well as construction of a fourth tower, according to the principal developer of The Pruneyard.
Oaktree Capital Partners is teaming with project developer and owner Ellis Partners to upgrade and expand The Pruneyard’s office complex, which now consists of three landmark office towers perched along Highway 17. Ellis Partners will continue to co-own the adjacent Pruneyard retail, restaurant and movie theater development, and will retain an ownership stake and continue to manage the Pruneyard Towers office complex.
“We are really excited that
we have a new partner, and a new plan for the office towers, and the ability to make another major investment in them,” Jim Ellis, managing principal of Ellis Partners, said in an interview with this news organization. The seller in the office deal was an affiliate led by Ellis Partners.
Although Ellis Partners and Oaktree didn’t officially disclose the financial terms of the deal, $141.5 million was the value of the Feb. 15 transaction, according to Santa Clara County public documents.
The deal includes the three office buildings, the site of a proposed fourth tower, and a multi-level parking structure, property
records show. The transaction was arranged through Eastdil Secured Investment’s South Bay team and Cushman & Wakefield agents Todd Beatty, Bob Simpson and Rob Souza.
“We are very happy to be able to make another large investment in the office buildings, and implement a major renovation of lobbies, common areas and build new amenities for the office project such as fitness facilities and conferencing,” Ellis said.
Pruneyard Tower One is 18 stories and totals 119,000 square feet; the singlestory Tower Two is 119,000 square feet; and Pruneyard Place is six stories high with 127,000 square feet. The planned fourth tower, which already has been approved by the city, would rise five stories and total 100,000 square feet.
The office towers are directly adjacent to the newly transformed Pruneyard Shopping Center, a 260,000-square-foot retail, restaurant, movie and hotel complex that Ellis Partners owns and has upgraded.
Two destination restaurants that are headed to the Pruneyard are Luna Kitchen and Be Steak A, Ellis said. Recent openings include Burger Lounge, Mendocino Farms and Asian Box. Already on site are Trader Joe’s, Rock Bottom Restaurant & Brewery, Orchard City Kitchen, and The Pruneyard Cinemas, a luxury theater where patrons can order refreshments delivered to their seats during movies.
“With this additional investment, the Pruneyard is, and will continue to be in an even greater way, a destination that will draw from throughout the Bay Area,” Ellis said.
The Ellis Partners and Oaktree Capital Management buying group, operating as Pruneyard Office Investors, obtained a $107.4 million loan from Wells Fargo Bank at the time of the purchase, the county documents show.
The proposed fourth tower on East Campbell Avenue would rise just east of Highway 17 right at the point that Campbell Avenue passes beneath the freeway.
“We have looked for opportunities to partner with Oaktree for many years and are pleased that our first venture together will be at the iconic Pruneyard Towers,” said Melinda Ellis, managing principal with Ellis Partners.