5900 State Farm Drive
In 2014, the nearly vacant property changed hands for approximately $7.5 million.
ROHNERT PARK, Calif., Dec. 22, 2015 – Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, has arranged the sale of 5900 State Farm Drive, a 68,683-square-foot medical office building in Rohnert Park, Calif. The property sold for $21.5 million, which equates to $316 per square foot. The cap rate was 5.75 percent.
Vincent Schwab, senior vice president investments in Marcus & Millichap’s San Francisco office, represented the seller, Meridian, and procured the buyer, Nazareth Enterprises Inc., who was completing a tax deferred exchange.
“The cap rate we achieved on the sale is aggressive considering that comparable properties in similar markets were in the 6.5 percent to 7.25 percent range,” says Schwab.
“Motivated institutional buyers were willing to pay 6.50 percent to 7.0 cap rates but in the end, the buyers exchange pressure, competitive offers, the strength of the tenants and the length of the leases resulted in a price considerably above that range.
“In 2014, when Meridian purchased the property for approximately $7.5 million, the building was 50 percent occupied by Kaiser and the lease had just 2.5 years remaining,” Schwab continues. “Meridian negotiated an 11-year blend-and-extend lease with Kaiser. They also completely renovated the second floor for a new tenant Petaluma Health Care, which was a condition of the 15 year lease. The asset is now 100 percent occupied and in an excellent position to provide stable cash flow for years to come.”
Kaiser Foundation Health Plan occupies 33,281 square feet on the ground floor of the medical office building and Petaluma Health Care occupies the entire 34,813-square-foot second floor. The building was constructed in 1973.
About Marcus & Millichap (NYSE: MMI)
With over 1,500 investment professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research and advisory services. Founded in 1971, the firm closed over 7,600 transactions in 2014 with a value of approximately $33.1 billion. The company has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more, please visit: www.MarcusMillichap.com
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