San Mateo County looks poised to turn a roughly $50 million profit on a pair of office towers it purchased for $40 million dollars to escape pricey leases for departments scattered elsewhere but never actually occupied.
GC Net Lease (Rancho Cordova) Member, LLC submitted the winning $90.1 million bid for 1 and 2 Circle Star Way, known collectively as Circle Star Plaza, during a public auction by the Board of Supervisors Tuesday afternoon.
One other sealed bid submitted was $88,488,888.88, said county spokesman Marshall Wilson.
Circle Star Plaza includes two four-story office buildings in the city of San Carlos and a three-story parking garage that straddles a small part of Redwood City. One tower is 103,948 square feet and the other 103,904 square feet.
The county purchased the building for $40 million in 2011 as a way to relocate departments and 911 dispatch and spent about $7 million more on improvements and management. After buying the buildings, the county’s space needs downsized and officials learned that making them seismically compliant would cost more than building an entirely new facility. Instead, the county leased first one and then both towers to SoftBank, a telecommunication and mobile company which owns a majority of Sprint Nextel. 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.
In 2013, county officials began mulling a sale and opened up the bidding process earlier this year with an $85.5 million minimum.
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 sale closes May 28 and the profits will go into the county’s general fund budget, Wilson said.
(650) 344-5200 ext. 102