Swift Real Estate Partners has made its second major office buy on the Peninsula in just one month by purchasing a fully subleased Stanford Research Park building in an off-market deal for $56 million from seller Pollock Financial Group.
Swift paid $690 per square foot for the approximately 81,000-square-foot building at 3495 Deer Creek Road in Palo Alto, according to a press release from the San Francisco-based firm. The building is fully leased to semiconductor manufacturer Broadcom for four more years and subleased to Rubrik, a cybersecurity company that went public in April, which is using the building as its global headquarters. The 1979 two-story property has been fully leased for the last 20 years, according to the release.
“Swift is buying strong cash flow and a high-quality building,” said the company’s Director Jack Waldsmith, who led the acquisition.
Pollock Financial Group has owned the property since at least 2012, according to public records. It has a 10-year $50-million balloon payment loan with Wells Fargo that matures in 2028, according to loan documents. Eastdil Secured represented Pollock Financial Group in the transaction and did not immediately reply to a request for comment. Swift did not use outside representation.
Less than 30 days ago, Swift closed on the $47.7-million acquisition of the Gateway at Millbrae Station, an 180,161-square-foot office and retail building about 25 miles north of its most recent purchase. For the Gateway property, the firm paid just $264 per square foot, but with $100 million in planned tenant improvements.
Waldsmith said the Peninsula and Silicon Valley are “some of the best office submarkets in the country” because of the heavy tech presence in the area and Swift has a successful track record in these submarkets as “they are in our backyard.”
The company continues to look for investments across the West Coast, Waldsmith said. It made both Peninsula investments on behalf of its latest commingled investment fund, Swift Real Estate Partners Fund III, according to the press release. The value-add fund closed just before the pandemic in January 2020, according to Swift’s website.
“The office segment will provide the best risk-adjusted returns in real estate in the coming years, and we are actively investing in new opportunities in the strongest markets,” Christopher Peatross, founder and CEO of Swift, said in a statement. “The depth of dislocation in office today requires owners to have local market knowledge, deep relationships and vertically integrated operational expertise to succeed.”
Peatross started Swift in 2010 and it has owned and operated real estate valued at more than $4 billion covering more than 10 million square feet since then, according to the release. It has regional offices in the East Bay and Silicon Valley, as well as Orange County, and Portland, Oregon. Last fall, it defaulted on a $71.4-million loan on a SoMa office building, which ended up getting picked up by lender CrossHarbor Capital Partners for $15 million.
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