Hines Group Wins California State Office Properties With $2.33 Billion Bid
A partnership led by Hines and Antarctica Capital Real Estate LLC was selected as the buyer of 11 office properties owned by the state of California after making a $2.33 billion offer.
Proceeds from the sale will be used to pay $1.09 billion of bond debt on the buildings and add $1.2 billion to the state’s general fund, the Department of General Services said in a statement today. California will lease back the offices over 20 years, and will no longer be responsible for maintaining, operating or repairing the buildings.
“This sale will allow us to bring in desperately needed revenues and free the state from the ongoing costs and risks of owning real estate,” Ron Diedrich, acting director of the department, said in the statement.
California went a record 100 days without a budget until Governor Arnold Schwarzenegger signed an $87 billion spending plan Oct. 8, sparing the world’s eighth-largest economy from having to issue IOUs for the second year in a row. The most populous U.S. state was the last to enact a budget for this fiscal year.
More than 300 bids were received for the buildings, which together comprise almost 7.3 million square feet (678,000 square meters), according to the department. The properties include the San Francisco Civic Center, Ronald Reagan State Building in Los Angeles, Capitol Area East End Complex in Sacramento, Elihu M. Harris Building in Oakland and Judge Joseph A. Rattigan Building in Santa Rosa.
Completion This Year
Diedrich today notified the state Legislature of the agency’s intent to sell the properties. The transaction is scheduled for completion by the end of this year, according to today’s statement.
The acquiring partnership, known as California First LLC, will provide 40 percent of the purchase price and finance the balance with a loan from JPMorgan Chase & Co., according to the department’s executive summary of the deal.
The group includes Hines, a Houston-based real estate investor and developer; Antarctica Capital Real Estate LLC, led by Rich Mayo of Spyglass Realty Partners and Chandra Patel of Irvine, California-based Antarctica Capital; and other equity investors, the department said.
To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net;
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
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