San Mateo County could potentially double its money on a pair of office towers purchased for $40 million with plans to free itself from pricey department leases but ultimately rented to a major telecommunications company.
One and Two Circle Star Way, known collectively as Circle Star Plaza, will be auctioned off in May and broker CBRE recommends a minimum bid of $85.5 million although the final price tag will be market driven, according to Real Property Services Manager Freda Manuel.
In a report to county supervisors, Manuel cited the “recent upward commercial market trends” making now an “advantageous” time to sell rather than hold on to the property.
Even that minimum is significantly higher than the $47 million the county paid to buy, improve, manage and lease out the property. Commission payments up to $600,000 will come from the sale proceeds and due diligence costs up to $250,000 will come out of either the sale or the general fund.
The county purchased the two four-story office buildings plus parking for $40 million in 2011 as a way to relocate departments renting space elsewhere and also 911 dispatch but discovered making the facilities compliant would cost more than constructing an entirely new building. The county’s space needs also downsized.
Instead, SoftBank Corp. first contracted to rent out the 103,948-square-foot tower at 1 Circle Star Way and months later added its 103,904-square-foot sister property, 2 Circle Star Way. Between the two, after broker fees and upfront improvement costs, the county estimated standing to bring in more than $6 million in yearly revenue and more than $30 million over the seven-year life of the agreement.
SoftBank is a telecom company which owns a majority of Sprint Nextel.
In 2013, the county began in earnest discussing selling off the properties and at Tuesday’s meeting the Board of Supervisors will consider formally declaring its intention and setting the sale terms such as time and place, opening proposals and how to publish notice.
As proposed, the sale will be by auction at the May 20 Board of Supervisors meeting with acceptance of the highest sealed bid.
The Board of Supervisors meets 9 a.m. Tuesday, April 22 in Board Chambers, 400 County Government Center, Redwood City.
(650) 344-5200 ext. 102