By: Randyl Drummer
Link: Starwood Capital
Investment firm Starwood Capital Group has sold 33 prime office properties totaling 3.3 million square feet in San Diego; Portland, Oregon; and Raleigh, North Carolina, to a Singapore-based developer in its first foray into U.S. real estate investment, according to sources familiar with the deal.
Starwood Capital had been quietly shopping the portfolio with New York brokerage Eastdil Secured and accepted an offer from Ascendas-Singbridge Group, a developer and investor jointly owned by Singapore state-owned real estate companies Temasek Holdings and JTC Corp., said the sources, who are not authorized to publicly discuss the transaction.
In a brief release that did not mention Starwood, Ascendas-Singbridge said Friday it plans to expand within the U.S. and is opening an office in San Francisco to provide support for asset management, business development and other related services.
Ascendas-Singbridge manages more than $14.6 billion in global assets, predominantly in Asia and Australia. According to its website, Miguel Ko, the current executive director and group chief executive of Ascendas-Singbridge, is the former chairman and president of Starwood Hotels & Resorts, Asia Pacific Division.
The discussions come as the group and parent company Temasek also aim to buy into the lucrative North American shared workspace market as part of a $45 million investment in Breather, a flexible workspace provider.
Sources in Los Angeles, San Diego and Portland said the portfolio includes most of Starwood Capital’s office holdings in San Diego and the Portland suburb of Beaverton, Oregon, plus properties in North Carolina.
The portfolio includes a heavy concentration of office and flex properties in the Rancho Bernardo and Sorrento Mesa areas of San Diego, home to many technology and life science companies, a source said.
Starwood acquired 12 San Diego buildings in 2014 totaling more than 1 million square feet in Rancho Bernardo and Sorrento Mesa from Los Angeles-based developer Kilroy Realty Corp. for $295 million, according to CoStar data. The properties, mostly built between 2000 and 2006, include six office buildings and a flex building at an office park in Rancho Bernardo known as Innovation Corporate Center, a source said.
The San Diego properties being sold also include the three-story, 318,000-square-foot Pacific Corporate Center at 10020 Pacific Mesa Blvd., occupied by medical device maker Becton, Dickinson and Co., and several buildings at Sorrento Mesa’s The Campus at Sorrento Gateway, the source said.
The bulk of Starwood’s current Portland portfolio is comprised of office and flex buildings in Beaverton acquired from Glendale, California-based PS Business Parks Inc. Starwood purchased 25 low-rise buildings, ranging from 16,500 to 65,500 square feet each from PS in October 2014 for $164.1 million, according to CoStar data. Most were built in the 1980s and 1990s.
Eastdil and Ascendas-Singbridge did not immediately return calls or emails requesting comment on the transaction. Starwood Capital didn’t immediately comment.
The portfolio purchase is the first major real estate investment in North America for Ascendas-Singbridge, which has properties in 28 cities in Australia, China, India, Indonesia, Singapore and South Korea. The group, under its subsidiary Ascendas, manages three Singapore exchange-listed funds, including Ascendas Real Estate Investment Trust, Ascendas India Trust and Ascendas Hospitality Trust. Ascendas-Singbridge also manages several private real estate funds.
Ascendas REIT just last month announced its first push beyond Australia and Asia into Europe, which includes a plan to buy 12 logistics properties in the United Kingdom. Ascendas-Singbridge Group Chief Investment Officer He Jihong said in a statement the move “fits well with Ascendas-Singbridge Group’s plans to widen our international presence.”
Ascendas-Singbridge and Temasek are also aiming to indirectly enter the shared workspace business through their investment in Breather, a flexible workspace provider specializing in leases of less than a year. Breather, launched in Montreal by entrepreneurs Caterina Rizzi and Julien Smith in 2013, announced in June it had raised $45 million from Ascendas-Singbridge, Temasek, Menlo Ventures, Canadian pension fund Caisse de dépôt et placement du Québec, and others to expand into more markets and provide “longer duration bookings.”