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The Real Deal 2014: top industrial sale

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Ryan Gallagher, Michael Leggett, Nick Psyllos
HFF
Approximately 1 million square feet in 12 office and industrial buildings in Sorrento Mesa and Carmel Mountain Ranch
Total consideration: $294.5 million

About the property:
Starwood Capital Group entity paid $294.5 million for about 1 million square feet in a dozen office and industrial buildings in Sorrento Mesa and Carmel Mountain Ranch.

The assets were sold by a Los Angeles-based Kilroy Realty Corp. partnership (Kilroy Realty L.P) to a Starwood partnership known as SOF-IX KR Holdings L.P. in a two-phase deal that substantially reduces Kilroy's presence in San Diego.

A dozen 2- and 3-story properties, including the 318,000-square-foot Pacific Corporate Center at 10020 Pacific Mesa Blvd. (the largest building in this portfolio) that is 100-percent leased to Cardinal Health); as well as 6055 Lusk Ave. and 5010 and 5005 Wateridge Vista Drive in Sorrento Mesa; plus 15435 and 15445 Innovation Drive; and 15051, 15073, 15231, 15253, 15333 and 15378 Avenue of Science in Carmel Mountain Ranch.

“Anytime you have a portfolio there's always a lot of moving parts with different tenants and what not, but I'd say the buyer, Starwood, did a great job and the Kilroy team did an exceptional job,” said Ryan Gallagher, senior managing director of HFF's sales investment team. “The Kilroy team built such an exceptional building that it's actually a privilege when you have the opportunity to sell or buy their buildings and investors realize that.”

Gallagher

Leggett

Psyllos

Closing the deal:

The HFF investment sales team, which represented both Kilroy and Starwood, was led by senior managing directors Nick Psyllos and Ryan Gallagher, and Michael Leggett, senior managing director and co-head of HFF’s national office investment sales platform.

HFF’s debt placement team was led by Senior Managing Directors Tim Wright and Don Curtis, and Senior Managing Director Aldon Cole.

Local market leasing experts who worked on parts of the deal included Rob Merkin, Ryan Egli and Mike Corbosiero of CBRE; Jay Alexander from Jones Lang LaSalle and Brett Ward of Cassidy Turley.

“There (was) a substantial amount of interest in the portfolio and we fully expect -- based on this interest, as well as what we're seeing on the tenant-demand side -- the San Diego market to continue its path to recovery and continued strong investor demand for that market,” Gallagher said.

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