TH Real Estate Lends $142M for Oakland Office Building Acquisition

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TH Real Estate has provided $141.5 million to KKR to finance the acquisition and future capitalization of 1330 Broadway, a 18-story office tower in Oakland, Calif., Commercial Observer has learned.

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San Francisco-based TMG Partners is the seller of the property, but it will maintain a minority stake and will also stay on to manage the building, sources said, although they would not specify the firm’s stake in the deal. The firm utilized $85 million in financing from Wells Fargo and Invesco to purchase and begin renovating the property in 2015, according to information from TMG’s website.

TH’s loan facilitated KKR’s $176 million purchase of the roughly 315,000 square-foot property in July. Sources declined to comment on the terms of the new acquisition financing. 

“We continue to see compelling opportunities in real estate debt, particularly in senior floating-rate, transitional loans for properties that are being repositioned or renovated,” Jason Hernandez, a managing director and head of originations at TH Real Estate, said in a statement. “[These opportunities] provide attractive risk-adjusted returns and allow us to offer a full suite of financing options to our borrowers, including long term fixed-rate debt and mezzanine financing.”

Built in 1958 and located at 1330 Broadway in downtown Oakland, the office tower underwent an almost $32 million repositioning following TMG’s 2015 purchase. The redevelopment included fa full renovation of the lobby, restrooms and common areas, upgrading the elevators, adding a new roof and revamping the property’s mechanical systems.

This purchase marks the second such deal for KKR in the Oakland area. In June 2017, the global asset manager picked up a 277,888 square-foot office building at 180 Grand Avenue for $119 million in a joint venture with Oakland-based Harvest Properties.

KKR declined to comment on the transaction. Officials at TMG did not immediately respond to requests for comment.