By Meghan Hall
It has been a busy fourth quarter for Beverly Hills, Calif.-based Kennedy Wilson, who has closed on yet another Puget Sound office sale in the region. According to public documents and an industry source familiar with the transaction, Kennedy Wilson has purchased Canyon Park East in Bothell for $54.625 million, or about $203 per square foot. Kennedy Wilson purchased the asset on behalf of its Kennedy Wilson Fund VI, commingled fund managed
The Registry reported that the 269,000 square foot complex hit the market in September of this year, and, according to sources closed on Friday—just in time for the holidays.
Comprised of five buildings, the seller of the property was Blackstone, who purchased the property in July of 2015 along with 20 other Eastside assets.
The five buildings were constructed between 1990 and 1993 and are a mix of office, flex and warehouse space. Building D is the largest on the 16.3-acre site, totaling 86,744 square feet, while Building E is the smallest, at 27,800 square feet. The property is located along 26th Ave. NE in Canyon Park, a master planned development totaling more than 1,000 acres that currently includes several shopping and commercial centers, including Thrashers Corner and the Canyon Park Business Center.
According to an offering document released by CBRE, the property is 83 percent leased and provides Kenned Wilson with a stable income stream due to a weighted average lease term of 6.5 years. The property is anchored by PCE Pacific, Inc., who occupies 28 percent of the property and whose lease is expected to roll in 5.1 years. Following close behind PCE Pacific, Lyell ImmunoPharma occupies 27 percent of the property with a lease expiration in about 10 years. Other tenants with long term leases include the FDA and Viavi Solutions, who have been at the property for more than 10 years. Only 19 percent of the complex’s tenancy will mature over the next five years, with renewal likely. Moving forward, ImmunoPharma is anticipated to invest $300 per square foot into its new Canyon Park East space.
Four out of five of the buildings are 100 percent lease, and, states CBRE’s brochure, Kennedy Wilson could see a $900,000 increase in NOI with the lease-up of the remaining 45,000 square feet.
Bothell continues to be an attractive market to investors and growing firms, due to the Eastside’s increasingly supply constrained office market. The State of Washington began investing in Bothell in the 1990s to attract companies to the area, and today Bothell’s Canyon Park and North Creek cluster has 2.2 million square feet of biotech and life sciences inventory. Combined, the two office parks include major firms such as Seattle Genetics, Juno Therapeutics, Thermo Fisher, Vioguard and Sonic Concepts. Facebook also continues to expand its Oculus campus, a satellite virtual reality headquarters along Willows Road, just ten minutes from Canyon Park East.
The acquisition follows upon Kennedy Wilson’s announcement that it has secured $775 million for its Fund VI, a private equity fund focused on value-add real estate investments across the Western U.S. The fund is expected to have the purchasing power of $2 billion in commercial assets and is the largest private placement in the company’s history.