Griffin Capital Company LLC, a privately-held alternative asset manager, has sold a 62,240-square-foot office property located in Emeryville, California for $36 million to Long Fellow Real Estate Partners, a private life sciences services firm.
The property was sold on behalf of investors of Griffin Capital (Shellmound) Investors DST and resulted in a realized total net return of approximately 427 percent, representing a 12.26 percent net internal rate of return over a 15-year holding period, Griffin said.
Griffin Capital purchased the Shellmound property in 2006 for nearly $15.8 million on behalf of a group of tenant-in-common investors. The TIC structure was converted to a Delaware statutory trust in 2016 at which point the lease was extended and the property recapitalized. The property was 100 percent net leased to Ex’pression College for Digital Arts and, as part of the sale, Griffin Capital assisted in the negotiation of an early termination of the lease.
“When we acquired the Shellmound property, we were attracted to its strong cash flow, stable tenancy and desirable location in the rapidly growing East Bay of San Francisco. After successfully navigating through the Great Recession and renewing the tenant to a new long-term lease, we were able to grow annual net cash-on-cash returns to our investors to 10 percent per annum,” said Kevin Shields, chairman and chief executive officer.
Shields added, “Emeryville has evolved into a leading hub for life science users, which generated significant interest from potential acquirers looking to transform Shellmound from office to life sciences. We successfully translated this surge in demand into a highly attractive exit for our investors, whose capital they have entrusted to us for well over a decade.”
Founded in 1995, Griffin Capital has owned, managed, sponsored or co-sponsored investment programs encompassing approximately $20 billion in assets. The firm is headquartered in El Segundo, California.
The company’s alternative investments include three groups of products: non-traded real estate investment trusts (REITs), interval funds in the company’s Institutional Access fund family, and tax advantaged strategies, including Delaware statutory trusts and opportunity zone funds.