December 4, 2008

Intercontinental Real Estate Closes $68 Mil Silicon Valley Buy


In a sizable NoCal industrial buy, Boston-based Intercontinental Real Estate Corporation acquired a 796.3k sf Silicon Valley property portfolio for $67.9 mil ($85/sf). The acquisition is comprised of three projects containing a total of seven industrial and flex buildings. The properties are: Fremont Industrial Park, at 48541 and 48551 Warm Springs Blvd in Fremont; Mabury Industrial Park, at 1565, 1585 and 1605 Mabury Rd in San Jose, and Milpitas Industrial Park, at 881-897 and 901-927 Wrigley Way in Milpitas.

The portfolio was about 94% leased to a diverse tenancy including credit tenants such as Kraft Foods (S&P: A-),Flextronics (S&P: BB+) and Loomis Fargo & Co. The properties’ strategic Silicon Valley locations and proximity to the three Bay Area airports, the port and major freeways are attractive qualities that contribute to the portfolio’s low vacancy rate.

The Silicon Valley Industrial Portfolio received strong interest in the market as it presented investors the opportunity to acquire a critical mass of industrial and flex product in an extremely supply-constrained industrial market. In addition, in-place rents were approximately 20% below market, which offers significant future net operating income growth.

The property was sold by Milpitas Industrial Properties Inc. Bob Gilley, Steve Hermann and Joe Moriarty of CB Richard Ellis brokered the transaction for Intercontinental, which purchased the assets on behalf of its U.S. Real Estate Investment Fund LLC. We happen to know that Intercontinental, which recently opened an office in Los Angeles, is actively seeking to acquire additional properties.

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