Carlyle and US Bank Fund $100MM Office Development in Mountain View

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Posted on March 3, 2016 by by Jon Peterson

Washington, D.C.-based The Carlyle Group and Tysons Corner, Va.-based US Bank have funded the nearly $100 million office building development located at 1001 North Shoreline Blvd. in Mountain View, according to sources familiar with the development.

The Carlyle Group declined to comment when contacted for the story. The developer of the project is San Francisco-based Calvano Development. It would not discuss any financial details on the project for this article.

The major capital source for the project is an approximately $67 million construction loan being provided by US Bank. This loan has a three-year term. There also is roughly a $33 million equity investment in the project made by The Carlyle Group.

Both the debt and equity for the development was arranged by the San Francisco office of The Greenwich Group International. “It must be noted how the key stakeholders and their strong counsel played a role in bringing this long-running, speculative office development process together. Calvano Development for an exceptional land assemblage, Carlyle for its entrepreneurship and flexible ability, US Bank for their patience and flexibility and lastly Google and the City of Mountain View,” says Tim McEnery, a director with Greenwich Group.

The moving of the dirt was started at the project a few weeks ago with the project expected to be completed sometime in early 2017. Part of this includes the demolition of nine office/R&D buildings that had been occupying the site. The site totals 7.5 acres, and it took Calvano Development four years to assemble the land for this project. The office building totals 111,443 square feet, all of which will be occupied by Google in a long-term lease. Calvano was represented in the lease by Phil Mahoney and Randy Gabrielson of Newmark Cornish & Carey.

The Mountain View class A office market and its sub-markets remain very tight for office space. According to sources familiar with the market, the current vacancy in Mountain View is less than four percent, and its less than one percent in the Shoreline sub-market.

Carlyle made its equity investment into the development for its latest opportunistic commingled fund, Carlyle Realty Partners VII, according to sources that track this kind of information. Carlyle completed its $4.2 billion capital raise for Partners VII in September of 2015. The portfolio for the commingled fund is projected to have a leverage amount in the range of 50 percent to 60 percent.

Carlyle likes to have the vast majority of its investments for its commingled funds be off-market kinds of deals. This can amount to as much as 90 percent of the transactions for the fund. The average size deal for the fund involves $15 million to $30 million of equity.

The targeted returns for Partners VII are a 16 percent net and 20 gross IRR. The property types on which it focuses include office, resort, hotel and retail assets. Carlyle attracted commitments from some large public pension funds for the commingled fund. This included a $200 million allocation from the Teacher Retirement System of Texas and $100 million from the Pennsylvania Public School Employees’ Retirement System.

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