Bids Due on Emeryville’s Watergate Towers
Submitted August 18, 2010, 7:49 PM
The sales process for the huge Watergate Office Towers complex in Emeryville, which fell into loan default last year, has begun.
Michael Covarrubias, chairman and chief executive of San Francisco-based TMG Partners, said bids for the properties were due Aug. 18. TMG is the bank-appointed receiver for the Watergate towers, three of which are on the block.
US Bank is asking at least $152 million for the 814,000-square feet of East Bay offices, Covarrubias said. That is the face value of the underlying mortgage loan against the properties, which US Bank inherited when it acquired the assets of San Francisco-based Pacific National Bank late last year. Pacific National was the original lender.
Jason Flynn, a director in the San Francisco office of Eastdil Secured LLC, is handling the sale, Covarrubias said. Eastdil did not respond to a request for comment. The loan is covered by a loss-sharing agreement between US Bank and the federal government, Covarrubias said.
Norm Hulberg, president of Hulberg & Associates Real Estate Appraisers, one of the largest property appraisal firms in California, said the sale will offer one insight into current values but won’t clear confusion. Appraisers, property owners and others have complained that it is difficult to value commercial real estate today because so few sales are occurring.
In properties with a lot of vacancy, values have dropped as much as 40 percent since late 2006, when the Watergate towers last traded, Hulberg said. That is the year that Hines and the California Public Employees’ Retirement System acquired the three Watergate buildings for their National Office Properties LP.
That contrasts with a decline closer to 10 percent in values for good quality, well-leased properties with blue-chip tenants on long-term contracts, Hulberg said. “[Watergate] is a great property. If this is in trouble, so are many, many others,” he said.
Sharon Simonson contributed to this report.
