Eight months after picking up the former Facebook headquarters at 1050 Page Mill Road, Sand Hill Property Co. has bought another major asset in Palo Alto’s prestigious Stanford Research Park.
This time it bought the headquarters of legendary Silicon Valley law firm CooleyLLP and a nearby parcel that could be a redevelopment site.
A joint venture of Redwood City-based Sand Hill Property Co., the firm headed by veteran investor and developer Peter Pau, acquired Cooley’s roughly 129,000-square-foot building at 3175 Hanover St. The building sits on more than 7 acres of land and is adjacent to Hewlett Packard’sheadquarters at 3000 Hanover.
Sand Hill also acquired a 2.9-acre parking lot at 3300 El Camino, which could be redeveloped to include new office building.
Parties involved in the transaction declined to release the total purchase price, but county title records peg the value of the sale at $140 million.
Sand Hill bought the ground lease for both properties, not the actual land underneath them. (This is standard procedure in this submarket; Stanford University owns all the land in the 700-acre business park, which is home to more than 150 employers, in perpetuity) The seller was Novellus Systems, which was acquired in 2012 by Lam Research. The ground leases run through 2051, according to people with knowledge of the property offering. Cooley is in its building for about another decade.
The transaction is another score for Sand Hill Property, which is currently firing on all cylinders. Sand Hill’s under-construction projects include a medical office building for Palo Alto Medical Foundation in Los Gatos; a major campus expansion for Netflix, also in Los Gatos; and Main Street Cupertino, the first major mixed-use development in years in the hometown of Apple Inc.
The property was marketed by Andrew Hueser of Cornish & Carey Commercial Newmark Knight Frank, who declined to comment. Financing for the Hanover property was arranged by CBRE Capital Markets’ Debt & Structured Finance Team. In a statement, CBRE said it arranged $86.5 million in non-recourse financing for the property, provided by a “Wall Street lender.” Commercial Mortgage Alert said the lender was Natixis, the French investment bank.
CBRE’s John Nelson declined to discuss the deal in detail. But he said in a statement that the transaction “was one of the most competitive financing situations I have seen in quite some time. The intense competition among lenders was a direct function of the strong location and tenancy of the prospect in addition to the excellent sponsorship.”
Sand Hill’s joint venture partner in the deal is believed to be an affiliate of the Abu Dhabi Investment Authority, a sovereign wealth fund owned by the Emirate of Abu Dhabi that has partnered with Sand Hill in past deals, according to people not directly connected to the transaction. Pau didn’t immediately return a phone call.
Properties in the research park don’t come available often, and when they do, there is very strong interest. The high-profile research park is home to tenants including Tesla Motors, SAP, Wilson Sonsini Goodrich & Rosati, VMWare, Nest Labs and numerous high-tech law firms. Vacancy is below 5 percent.
This is the biggest acquisition in the research park since Sand Hill picked up 1050 Page Mill last year. Sand Hill has proposed a redevelopment of that site, which has been vacant, with plans to transform the 13.5 acres into an architecturally striking office project.