Investcorp adds to real estate portfolio with Northern California acquisition

13 Mar 2012

Investcorp’s US-based real estate arm announced today that it has acquired a portfolio of mixed-use commercial real estate properties in the Northern San Francisco Bay Area that demonstrates the firm’s continued selectivity and focus on high-yielding assets.

In the largest transaction closed in the North Bay area so far this year, Investcorp acquired the properties for approximately $65 million. The predominately Class A portfolio comprises 14 buildings, including a mix of office, industrial, and retail properties concentrated in Petaluma, totaling 840,637 square feet. The properties are currently occupied by a diverse group of tenants. The greater San Francisco Bay Area is consistently ranked by institutional real estate investors as one of the top areas for investment within the United States.

In acquiring the portfolio, Investcorp ventured with PB&J Acquisitions, a San Francisco-based real estate owner and operator. Together Investcorp and PB&J will seek to increase the net operating income of the properties by leasing the currently vacant space and by renewing existing tenants.

“This acquisition of a diverse group of Class A properties presents a unique opportunity to generate solid income returns while also advancing leasing and operating income over a longer time horizon,” said Herb Myers, a managing director in Investcorp’s real estate team. “The multi-assets nature of this portfolio should also enable us to pursue, opportunistically, a number of value creating options.”

The location of this investment builds on an established Investcorp focus on properties in close proximity to major US markets. Such investments sometimes lie in overlooked real estate sub-markets where it is easier to secure investments at attractive valuations. In line with this strategy, Investcorp closed two greater Los Angeles area transactions in 2011 – the Park Tower office complex in Long Beach and the Residence Inn Manhattan Beach. These were complemented by additional transactions in Princeton, NJ, and in the corridor between West Palm Beach and Ft. Lauderdale, FL.