Business & Real Estate

Investors to sell off $100 million Sacramento-area office portfolio

A large portfolio of Sacramento-area office properties has been placed on the market, with a likely sales price exceeding $100 million.

Real estate executives confirmed Thursday that a subsidiary of Deutsche Bank is unloading seven Class A buildings – in Natomas, Roseville and Rancho Cordova – after holding them for about a decade.

The properties’ combined 631,000 square feet of office space makes the offering one of the largest ever in this region.

The sale at this time recognizes that more institutional investors “are looking to place money in Sacramento and outside the Bay Area,” said Ron Thomas, executive director with the local office of Cushman & Wakefield, which is assisting in the sale.

The San Francisco office of DTZ is the lead broker in the deal, representing seller Deutsche Asset Wealth & Management. Officials in the DTZ office did not offer any comments.

Included in the package are high-profile buildings that are mostly occupied by blue-chip tenants.

They include a four-story, 117,000-square-foot building at 2860 Gateway Oaks Drive in Natomas, near the convergence of Interstate 5 and I-80, that serves as the Sacramento-area campus for the University of Phoenix, according to a DTZ sales brochure.

Four other buildings are on International Drive and Kilgore Road in Rancho Cordova, where the largest tenants are Verizon, Delta Dental of California and the state’s Department of Child Support Services.

Adventist Health and the Judicial Council of California are the largest tenants at the two Roseville properties, on Creekside Ridge Court and Creekside Ridge Drive.

“When you look at the locations, property type, levels of maintenance and tenant quality, this will be a very attractive” investment opportunity, Thomas said.

No asking prices are listed in the sales brochure, but local real estate officials estimated the package as a whole could draw bids of $180 per square foot or even more.

“This could easily be a $120 million deal, which is great for Sacramento,” said Randy Getz, an investment specialist in the Sacramento office of CBRE.

Others estimated the value at closer to $100 million.

Getz speculated that the owners are selling now because the properties are all doing well and can attract top dollar. “It’s an opportunity to harvest your profits and deploy them elsewhere,” he said.

The fact that one of the buildings has a sizable vacancy, created by a recent Delta Dental downsizing, actually could be an enticement, creating a “potential value add for the buyer,” he said.

Overall, the buildings are 89 percent leased.

Deutsche Asset Wealth has held the properties since 2006, according to the DTZ sales brochure.

The properties are being offered as a whole package or buyers can bid separately on the Natomas building and each of the groups of buildings in Rancho Cordova and Roseville.

Call The Bee’s Bob Shallit, (916) 321-1017.