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$81.7 million for Natomas offices, land Prentiss Properties' acquisition feeds commercial real estate's big-deal trend
By Bob Walter
Bee Staff Writer
(Published April 4, 1997).
The River City Bank building and its silvery twin six- story office tower in South Natomas have been sold to a Dallas-based real estate trust as part of the second-biggest commercial transaction ever in the Sacramento region.
Prentiss Properties Trust paid $81.7 million to Sacramento broadcast and banking executive Jon Kelly, his brother, Robert, and various partners for six office buildings with a total of 564,606 square feet.
The deal, which closed Wednesday, also includes 11 acres of adjacent land in the Natomas Corporate Center that could accommodate another 117,000 square feet of offices.
"This transaction will underscore Prentiss' commitment to the rebound of California real estate and the strength of the Sacramento office market," said Thomas F. August, president and chief operating officer of Prentiss
August said the trust is eager to expand in Sacramento and the rest of California and plans to close on several other acquisitions in the state within a month.
Prentiss owns interests in 102 office and industrial properties in 12 national markets. Its real estate services subsidiary, Prentiss Properties, manages about 42 million square feet of office and industrial properties in Sacramento and 20 other national markets.
Prentiss made its first purchase in the capital a historic one. Though technically involving seven separate transactions, tl1e package represents the capital's biggest deal since Heitman Advisory Corp. of Chicago paid about $98.5 million for Arden Fair Mall in 1994, said Bert Giannelli, a commercial real estate appraiser with Giannelli, Jarrette & Filipiak of Roseville.
The landmark Natomas deal was brokered by Tom Aguer and Frank Pipgras of Sacramento's Aguer Pipgras Associates and Gary Arabian of the CAC Group in San Francisco, all of whom represented the seller. Prentiss used its own brokers.
"This acquisition expands our existing management and leasing presence in Sacramento and positions us as a major player in this dynamic market," said David Robertson, senior vice president and managing director of Prentiss' western region.
Mark Doran, Prentiss' chief financial officer, said Thursday that the vacant 11 acres gives the trust additional growth opportunities in the Sacramento market. He said Prentiss has no firm plans for the land but is continuing to evaluate its options.
When the vacant property is excluded from the deal, the Natomas purchase ranks as Sacramento's second-largest office transaction ever, Giannelli said, trailing only the $80.7 million sale of the Capitol Bank of Commerce in 1986.
"I, think the story of the year is going tyo be large transactions," the appraiser said. "So far, this has to be one of the biggest years I've seen for huge deals."
In addition to Prentiss, Giannelli was referring to the recent sale of five capital apartment complexes to a Utah-based investment firm and a pending deal for almost 700,000 square feet of mostly suburban offices owned by Sacramento developers Carl D. Panattoni and Ben Catlin.
In the apartment deal, Wasatch Property Management Inc. paid about $77 million for 2,017 units in complexes in Antelope, North Highlands, south Sacramento and Rancho Cordova.
The pending office transaction, reportedly for about $70 million, would be the capital's biggest ever in terms of square footage and the third largest in terms of dollars.
G&W Management Co. of Petaluma reportedly is in escrow to buy the office portfolio, which includes complexes on Howe Avenue, J Street, Fair Oaks Boulevard and in the Prospect Park and Capital Corporate Center office parks in Rancho Cordova
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