TMG Partners sells Emeryville Public Market

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TMG Partners has won awards for many projects
including honors for “Best Mixed Use,”
“Best Office,” and “Best Historic Rehabilitation”.

November 14, 2012
San Francisco Business Times
TMG Partners sells Emeryville Public Market

In one of the East Bay's largest deals this year, Angelo Gordon and City Center Realty Partners teamed up to buy the Emeryville Public Market, a 271,000-square-foot mixed-used retail and office complex that is entitled to include up to 1 million square feet of existing and new space.

TMG Partners and Rockwood Capital, the sellers in the deal, entitled the 14-acre property at 5959 Shellmound St. to transform it into a pedestrian-friendly, sustainably designed neighborhood, and scored LEED platinum certification for Neighborhood Design.

Terms of the deal were not disclosed, although market sources estimate the price was between $60 million and $70 million.

"Emeryville is a thriving city, and Public Market is a great place to expand a unique mixed use community into a model sustainable infill project," said Mark Stefan, a partner with City Center Realty Partners.

Angelo Gordon is a New York investment firm with $25 billion of assets. CCRP is a San Francisco-based real estate development firm with projects nationwide including several mixed-use retail and office projects in Union Square in San Francisco.

"The deal represents the largest East Bay retail mixed-used transaction this year," said Nicholas Bicardo, a broker with HFF who represented the seller along with Steve Golubchik and David Karol, also of HFF. "Once you factor in the entitlements coupled with the strong demand drivers in the market and ability to add density in this urban location, it resulted in a buyer frenzy."

The property contains 152,000 square feet of retail and 119,000 square feet of office with entitlements for an additional 830,000 square feet of more retail, office and multifamily space.

TMG developed the property in the late 1980's and brought in Rockwood Capital as an equity partner in 2003.

The entitlement plans, designed by Heller Manus Architects, involved converting the existing buildings and surface parking lots into a dense "urban village."

TMG had secured a $3.1 million grant from the City of Emeryville Successor Agency to build affordable units and a $5 million California Pollution Control Finance Authority Infill Grant to clean up contamination on the site.

The Public Market project received a California Catalyst Communities Pilot Project grant of $1.35 million to pay for electric vehicle charging stations, a solar carport, models of recycling and composting, environmental education and a science display on the project's green features.

Last year, TMG and Rockwood spent $4 million sprucing up and renovating the retail component of the project with a new facade, signage and decor. The owners remodeled the international food court and brought in Guitar Center and Urban Outfitters as new tenants to replace Borders after it closed.

"Our renovation of the Public Market has created a strong platform for continued innovative development of the property with an infusion of new capital and enthusiasm for a dynamic Emeryville," said Michael Covarrubias, chairman and CEO of TMG. "We think we're selling at a good price, but the buyers also have the future upside of the expansion."

Prior to this transaction, TMG sold a 190-unit apartment development site at the corner of 64th and Christie streets to Essex Property Trust, which plans to complete the complex by the first quarter of 2014.

The Emeryville transaction is another in a long line of deals TMG done in the past year.

The firm sold off about 3 million square feet of assets while at the same time acquiring 1.5 million square feet worth of property.

Sales deals include 680 Folsom St., also with partner Rockwood, that TMG sold to Boston Properties in a stock and cash transaction valued at $340 million or about $650 a square foot.

Earlier in the year. TMG and DivcoWest sold 1275 Market St. to Dolby for about $110 million, having bought it for $44 million.

TMG also sold two apartment development sites in San Francisco to Essex Property Trust for an estimated $250 million.

Covarrubias said in some cases, like Emeryville Public Market, the firm had added enough value to a project to justify selling it or real estate values have risen enough to make selling more lucrative than holding onto a property.

"There were a lot of opportunities to come up this year," Covarrubias said.

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