Monday, September 16, 2013

TMG buys eight Cisco buildings in North San Jose

Sep 16, 2013, 2:33pm PDT Updated: Sep 16, 2013, 5:19pm PDT

TMG buys eight Cisco buildings in North San Jose megadeal


TMG Partners and Fortress Investment Group bought eight buildings in North San Jose from Cisco Systems Inc.
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TMG Partners and Fortress Investment Group bought eight buildings in North San Jose from Cisco Systems Inc.
Real Estate Reporter- Silicon Valley Business Journal
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Cisco Systems Inc. has sold off eight R&D buildings in North San Jose -- representing more than 800,000 square feet -- to a joint venture of TMG Partners and Fortress Investment Group.
Cisco is not going anywhere right away. Under terms of the highly anticipated deal, which closed Monday, Cisco will lease back the eight buildings at 110 through 250 West Tasman Drive. Cisco will begin vacating the offices starting in 2014, continuing to give up space in several tranches over the next three-and-a-half years, officials said.
The transaction -- the year's largest single investment sale so far by square feet -- means San Jose's main jobs corridor will soon get another major office-campus opportunity. And it highlights Cisco's shifting real estate strategy as the company, which once steadily built office space by the bushel, now goes denser inside its remaining buildings, of which it still owns dozens.
"We really like the Valley," said David Cropper, managing director for TMG Partners. "It has a great economic engine, and this was such a unique campus."
The transaction's sale price was not disclosed, but multiple sources said the cluster of buildings was expected to trade in the neighborhood of $190 per square foot, or roughly $154 million.
Value add
The acquisition allows TMG and its financial partner, Fortress, to come to market with a major campus opportunity at substantially below replacement cost. The cluster of buildings consists of seven 95,000-square-foot buildings and one 150,000-square-foot building, all two stories, on 40 acres.
City officials on Monday welcomed the deal as a win-win, with the city potentially gaining a new major tenant and keeping Cisco at the same time.
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Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.
Next Article: Tesla hiring a self-driving car engineer


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