CBRE’s Debt & Structured Finance team has secured a $100 million construction loan for The Grove, located in Los Gatos, California. The project’s initial phase is now under construction and is scheduled to be completed in May of next year. It consists of two office buildings totalling 242,000 square feet which have been pre leased to Netflix Inc.
The entire park will be made up of 485,000 square feet of Class A office space in three and four-story buildings. They were developed by a joint venture between The Carlyle Group of Washington, DC and Sand Hill Property Co., of Menlo Park, Calif.
The Grove is being developed on a 21.5 acre site that was previously home to a 10-building, 250,485-square-foot campus that was called the Los Gatos Business Park. The value of the new project on completion of construction will be $236 million.
The financing features a variable LIBOR-based interest rate and was provided by a group of investors. The leader of the syndicate was SunTrust Robinson Humphrey with SunTrust Bank as administrative agent. John Nelson, an executive vice president at CBRE’s San Francisco office, arranged the financing deal.
Mr. Nelson remarked recently that the Town of Los Gatos is one of the toughest “barrier-to-entry markets in all of Silicon Valley,” citing the tough entitlement and approval process and the limited availability of developable land in the area. Santa Clara County is one of the best-performing metro economies in the country and is likely to remain a top performer for several years, according to a report released in January 2013 by the Milken Institute of Santa Monica.
Asking rents are expected to rise by approximately 4.9 percent by the end of the year to $34.62 per square foot.
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