KBS Assisted in the Acquisition of Park Tower in Sacramento, California; Class A Office Tower for $165.5 Million on Behalf of Prime US REIT
Park Tower features five-star amenities and walkability to California’s state capitol and downtown Sacramento’s retail and entertainment core
KBS, one of the largest investors in premier commercial real estate in the nation, announced today that the company assisted in the acquisition of Park Tower, a 489,171 square-foot Class A office building in Downtown Sacramento, California. The property was acquired for $165.5 million by Prime US REIT (PRIME), which trades on the Singapore Exchange Securities Trading Limits ticker as: OXMU.
KBS serves as the U.S. based asset manager for the portfolio, which included identifying and sourcing this asset on behalf of the portfolio. Park Tower is a Class A property that consists of 24 stories of office space, retail and parking garage space.
“This is the first new acquisition for the portfolio since listing 11 properties on the Singapore Exchange last year,” says Rod Richerson, regional president, Western United States, for KBS. “Acquiring Park Tower is a strategic investment into a prime location and a premier asset. At 92% occupancy, Park Tower is one of the top five buildings in the Downtown Sacramento market with strong in-place cash flow and a diverse base of credit tenants.”
Sacramento is a region with healthy fundamentals for continued growth, adds Richerson. “Private companies are increasingly drawn to Sacramento for its abundant young and highly educated workforce and lower cost of living. More than 34% of individuals in the area have a college degree.”
According to a Q4 2019 Sacramento Market Report from Newmark Knight Frank (NKF), the Sacramento office market maintained its positive momentum in the fourth quarter to finish the year strong. Net absorption was positive for the 13th consecutive quarter, totaling 159,317 square-feet, which brought the year to date total to a positive 780,922 square-feet.
Sacramento’s office market also features high barriers to entry with less than 5% vacancy in Class A office assets and no new projects under construction in the downtown market. Several major tech, biotech and healthcare firms have a presence in the region, including the Intel Corporation, Hewlett Packard, Apple, Sutter Health, Affymetrix, Lipomics Technologies Inc., Calgene LLC, Novozymes Biotech Inc. and Volcano Therapeutics.
One of the tallest buildings in Sacramento, Park Tower is centrally located at 980 9th Street and 1010 8th Street in Sacramento, California. The asset is situated within walking distance of California’s state capitol; Downtown Sacramento’s retail and entertainment core, Downtown Common, a newly developed mixed-use entertainment and shopping complex with 670,000 square-feet of retail, entertainment; and Golden 1 Center, the NBA’s Sacramento Kings’ basketball arena. Currently in development is a mixed-use project called The Railyards which will double the size of Downtown Sacramento when its completed. It’s the largest in-fill development project west of the Mississippi River and will include up to 515,00 square-feet of retail, 10,000 housing units, a state-of-the-art 21,000 seat soccer stadium and a 1.22MM square-foot 18-acre Kaiser Medical Center.
“Working with PRIME to acquire a trophy asset in the heart of one of the strongest markets in California is a testament to KBS’ ability to identify best-in-class assets that attract today’s top office users,” says Brent Carroll, senior vice president for KBS and asset manager Park Tower. “This transaction allows us once again to utilize our proven hands-on asset management strategy to provide tenants with high-quality, well-amenitized office space.”
A LEED Gold-certified property, Park Tower’s office tower was originally built in 1992 and renovated in 2019, while the parking area was constructed in 1961 and renovated in 1998. The building features a suite of robust onsite tenant amenities, including a recently renovated fitness center, locker rooms, conference center and tenant lounge.
The property also provides a host of state-of-the-art features including a three-story atrium lobby, highly efficient building systems, 15,000-28,000 square-feet of flexible floor plates, and above-market parking in two garages at a ratio of 2.4/1,000 – as compared to competing office towers at a ratio of 2.0/1,000.
Park Tower is situated in close proximity to the state government buildings and nearly 60,000 undergraduate students at UC Davis and Sacramento State University. A 15-minute drive to Sacramento International Airport and 90-minute drive to San Francisco, the property features easy access to major highways, trains, and the downtown Sacramento light rail system, as well as lifestyle destinations Napa Valley and Lake Tahoe.
Grant Lammersen, Steve Golubchik and Tyler Myerdirk of Newmark Knight Frank brokered the transaction.
“In identifying Park Tower for PRIME, KBS has leveraged its deep understanding of the outstanding market fundamentals to purchase one of the premiere office towers in the downtown Sacramento market,” says Lammersen.
Bruce Fischer, Christine Fan, and Howard Chu of global law firm Greenberg Traurig, LLP’s Orange County office represented PRIME as legal counsel in the acquisition.
“We were very pleased to represent KBS in this significant strategic transaction on behalf of PRIME” said Fischer, Greenberg Traurig’s Chair of the West Coast Real Estate Practice and Co-Managing Shareholder of the Orange County Office, who led the Greenberg Traurig team and represented KBS.
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