CarrAmerica Buys Nokia Property for $407 Per SF

MOUNTAIN VIEW, CA-A two-building, 131,561-sf office complex leased long-term to Nokia has changed hands for $53.6 million or $407 per sf. The new owner is CarrAmerica Realty Corp., the publicly traded REIT from Washington, DC. The seller was Palo Alto-based Keenan-Lovewell Ventures, which developed the complex in 1999 and landed the high-credit tenant.The buildings sit along Highway 101 at 313 and 323 Fairchild Dr. The lofty price is due to the equally lofty lease rate Nokia is paying, having signed on before the dot-com debacle. CarrAmerica says Nokia is committed to lease the buildings through June 2009. Because of the over-market rent, CarrAmerica says the year-one GAAP return, which reflects the mark to market rental rates, is 6.7%, while the year one cash yield is expected to be 9.3%.Keenan-Lovewell’s John Lovewell tells GlobeSt.com that he did not want to sell the property, “but it seemed like a unique moment in time” to get an especially good return on the investment. “In our shop, we have a love affair with our real estate, and this property was particularly dear,” he says. “It’s a gorgeous, well-leased property with a freeway identity.”CarrAmerica’s Northern California managing director Christopher Peatross was not available Wednesday for comment. In a prepared statement, he says, “Class A Silicon Valley buildings are exhibiting good leasing momentum and some of the highest rents and lowest vacancies in the market. Additionally, the Mountain View submarket, while accounting for less than 10% of the office space in Silicon Valley, accounts for nearly 70% of the net absorption over the last 18 months.” Michael Zietsman of Zietsman Realty Partners represented Keen-Lovewell Ventures. CarrAmerica represented itself. In Northern California, CarrAmerica owns, directly or through joint ventures, interests in 87 office and R&D buildings containing over 6.4 million sf. Nationwide, it owns interests in a portfolio of 290 operating office properties totaling approximately 27 million sf.