Hudson Pacific Picks Up California Office Buildings for $3.5B

In another big move for Blackstone this month, it was announced that Hudson Pacific Properties, Inc. will acquire Equity Office Properties' San Francisco Peninsula and Silicon Valley portfolio from Blackstone Real Estate Partners V and VI in a stock and cash transaction valued at $3.5 billion. The transfer brings together two highly complementary office portfolios with a combined asset base of 53 properties totaling approximately 14.6 million square feet across Northern and Southern California and the Pacific Northwest.

The off-market transaction will effectively double Hudson's size and result in Hudson having an equity market capitalization of $3.7 billion and total enterprise value of approximately $6.5 billion. The transaction is subject to customary closing conditions, including Hudson stockholder approval of the proposed equity issuance. Affiliates of Farallon Capital Management, L.L.C., which own approximately 15% of the outstanding common equity on a fully diluted basis, have entered into a voting agreement supporting the transaction.

"The acquisition of the EOP Northern California Portfolio perfectly aligns with our strategy to acquire high-quality office properties in West Coast markets poised for continued growth through off-market transactions. Hudson has long targeted these two Northern California regions for expansion, and while we expect the transaction to be immediately accretive to FFO, we also intend to move quickly to employ our leasing, repositioning and development expertise to extract additional value for our stockholders," said Victor Coleman, Hudson Pacific Properties' Chairman and Chief Executive Officer.

"We chose to take a major stake in Hudson given its high-quality portfolio, outstanding management team and attractive prospects for growth. We believe strongly in the upside potential of the EOP Northern California Portfolio and this combination creates a market-leading West Coast office REIT," said Jonathan Gray, Blackstone's Global Head of Real Estate.

"As long time shareholders, we are excited about Hudson's latest growth opportunity, and are confident that they will continue their excellent track record of execution," added Rocky Fried, Managing Member at Farallon Capital Management.

For more news and information visit Blumberg Capital Partners.

Zynga HQ Hitting the Market

Another mega-offering is hitting the market in the San Francisco as the 670,000 square foot Zynga headquarters at 650 Townsend St. comes to market, with Michel Seifer, Paul Lee, and Rob Hielscher of Jones Lang LaSalle handling the transaction. According to the San Francisco Business Journal, the property is expected to bring in between $350 a square foot and $400 a square foot, or $234 million to $268 million, for the sellers, TMG Partners and Farallon Capital Management. The partnership originally purchased the property in 2007 for $116.9 million ($174 per square foot) and since invested another $85 million in the property for upgrades and improvements.

The property sits at the edge of both Mission Bay and Portrero Hill and was half vacant when the partnership first acquired the building. Computerworld published an online slideshow featuring the property after Zynga, best known for its online game Farmville, recently moved into the space. The 5 story building, previously used as the old Sega headquarters, features a 60-foot atrium, private theater, and fitness center and houses more than Zynga 1,700 employees.

For more news and information visit Blumberg Capital Partners.