AT&T Inc., the largest U.S. telephone company, sold an office complex in the San Francisco Bay area to Sunset Development Co. and MetLife Inc. (MET) for more than $250 million, a Sunset executive said.
AT&T, which is seeking to fund expansion, will lease back about half of the 1.8 million-square-foot (167,000-square-meter) property, said Edward Hagopian, an executive vice president at closely held Sunset. The complex is in San Ramon, about 35 miles (56 kilometers) east of San Francisco.
Dallas-based AT&T said last year that it’s open to the sale of some of its peripheral assets, including wireless towers. Sunset, which once owned the land where the office complex sits, and New York-based MetLife, the largest U.S. life insurer, plan to redevelop the complex to attract additional tenants starting this year, San Ramon-based Sunset said in a statement.
“It provides us with a significant lease from AT&T, along with 1 million square feet of office space that is available and of the highest quality in the Bay Area,” Alex Mehran Jr., Sunset’s president and chief operating officer, said in the statement.
Aside from the sale-leaseback, AT&T is retaining ownership of telecommunications infrastructure at the property, said Fletcher Cook, a spokesman for the company.
“Our employees and operations will not be affected by this transaction,” he said.
John Calagna, a MetLife spokesman, declined to comment on the purchase.
MetLife, which invests in commercial real estate in major markets around the world, will own a 49 percent stake in the project, according to the statement. The addition of the property, which has four wings of about 500,000 square feet each, will increase Sunset’s Bishop Ranch office park project in San Ramon to 10 million square feet, Hagopian said.
Pacific Bell purchased the land from Sunset in 1983 and developed the office complex. Pacific Bell’s parent company was acquired in 1997 by SBC Communications Inc., and in 2005 SBC bought AT&T Corp. and changed its name to AT&T Inc. (T)
Sunset will revamp the property to add amenities such as new restaurants, auditoriums, a town center and services including day care, Hagopian said. The company plans to start marketing the vacant office space in mid-February, he said.
MetLife had $10.1 billion of real estate investments as of Sept. 30, up from $8.7 billion a year earlier. Buildings are among the assets the insurer can invest in to generate profits and back future obligations to policyholders.
The company has been seeking to invest in real estate on behalf of clients to add fee income. The insurer expanded its property joint venture with Norway’s sovereign wealth fund to $1.7 billion this month with buildings in San Francisco and Washington, D.C.
Wells Fargo & Co. financed the San Ramon deal, which was completed Dec. 30, and Eastdil Secured LLC advised Sunset on the acquisition and debt and equity capitalization, according to the statement.
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