Singapore’s Mapletree Investments is making another bet on the future of the US tech economy as the Temasek Holdings-controlled real estate firm is linked to the pending sale of an office building in the San Francisco Bay Area.
The Uptown Station office building in Oakland has been placed under contract, with Mapletree understood to be buying the recently renovated asset for about $420 million, according to three sources familiar with the sale, although no final price has been confirmed.
The acquisition of the 396,808 square foot (36,865 square metre) asset, which has yet to close at this time, follows 2020 Mapletree investments in US offices and data centres, with the company having also established a dedicated REIT for holding US and European logistics properties.
Mapletree’s latest US target is what was once envisioned as the world headquarters for ride-sharing giant Uber at 1955 Broadway in Oakland’s revived Uptown neighbourhood. Uber sold the building in 2017 without ever having moved in, and the 1929-vintage landmark is now fully leased to digital payments firm Square.
Los Angeles investment firm CIM had purchased the property from Uber for $180 million, or about $505 per square foot, according to public records and earlier reporting by property news site The Registry.
After securing the lease with Square, the L.A. firm then put the property up for sale last year, with Blackstone signing a contract in February 2020 to purchase Uptown Station for a reported $405 million or $1,020 per square foot, according to local market sources.
A few months after Blackstone had agreed to purchase the four-storey complex, the New York-based firm chose to pull out of the acquisition in the wake of uncertainty caused by COVID-19, despite having to walk away from a $20 million non-refundable deposit.
CIM Group put Uptown Station back on the market last month with an asking sale price close to $420 million. The San Francisco office of Knight Frank Newmark has been representing the seller, although the company did not respond to an email in time for this story.
Should the transaction with Mapletree go through, the sale of the property would produce a cap rate — or investment yield — of 5 percent, based on the property’s current net operating income, as stated by a source aware of the transaction.
If the deal for Uptown Station is consummated at that reported rate, it would mark a record $1,058 per square foot — the highest ever for an Oakland office property on a price per square foot basis. The current record was set by France’s AXA Investment Management in 2019 when it purchased 180 Grand in Oakland at a rate of $632 per square foot, according to public records.
Steadfast Tech Tenant
With the pandemic having shaken the confidence of corporate occupiers, Uptown Station has a tenant covenant that has enhanced value for institutions like Mapletree, which manages $45.3 billion in assets globally.
Square is signed up to occupy all of Uptown Station’s office space for the next 11 years, providing guaranteed cash flow from a fast-growing tenant.
Before CIM had acquired the one-time Sears store in December 2017, Uber had purchased the Oakland icon for $123.5 million in 2015 and spent about $8 million more to repurpose the Beaux-Arts structure.
Menlo Park-based Lane Partners and its equity partner, Chicago-based Walton Street Capital, had acquired the project on Oakland’s Broadway in 2014 for $24.2 million and invested another $40 million in the project.
Mapletree Grows in the US
Singapore’s Mapletree has invested in the Northern California market previously and holds a number of properties in the region, including assets in Redwood City, Livermore, Newark, Mountain View and West Sacramento.
The company’s US properties frequently align with tech occupiers, including a purchase last September by Mapletree Industrial Trust, a Singapore-listed REIT managed by the private firm, which agreed to pay at least $204 million for a Virginia data centre leased to Facebook.
That transaction came after the listed trust had paid $211 million last June to buy out Mapletree’s 60 percent stake in a portfolio of US data centres purchased as part of a $1.37 billion deal with Digital Realty in 2019.
Last September, Mapletree agreed to pay $189.1 million to purchase a portfolio of office properties in the Perimeter Park tech enclave near the Raleigh-Durham Research Triangle in North Carolina.
Further back in 2018, the company purchased a 29-storey office tower in Minneapolis from Hines Global REIT for $258.5 million.
A version of this story first appeared in The Registry, a San Francisco Bay Area real estate news site.