Spieker to Buy Properties From Goldman Sachs

Goldman, Sachs & Co. agreed Wednesday to sell a portfolio of 44 properties to real estate investment trust Spieker Properties Inc. for $725 million.

The bulk of the properties, part of the so-called WCB portfolio controlled by Goldman’s Whitehall Street real estate fund, are office and industrial buildings totaling about 6.3 million square feet in California, Oregon, Washington, Colorado, Arizona and New Mexico.

Eight of the 44 properties, totaling 900,000 square feet, are in Southern California. The signature property of the group is the 255,000-square-foot Stadium Towers Plaza in Anaheim, said Craig Vought, Spieker’s chief financial officer. The others are smaller buildings in Irvine, Anaheim, Redlands, Ontario and northern San Diego County, he said.

“From a strategic standpoint, this is great,” said Montgomery Securities analyst Christopher Hartung, who follows REITs. “This is smack-dab in Spieker’s key markets. Spieker has been able to grow and provide really good returns through the concentration and development of local market expertise on the West Coast.”

Shares of Menlo Park, Calif.-based Spieker rose 94 cents to close at $40.94 on the New York Stock Exchange.

The deal, which would increase Spieker’s holdings by about 23% to more than 34 million square feet, comes amid a robust market for office properties. Strong economic growth has spurred demand for commercial space.

Earlier this week, Equity Office Properties, owned by financier Sam Zell, agreed to buy Beacon Properties for $3.2 billion. The transaction would link two of the largest U.S. office building owners.

Spieker would keep 32 properties and sell the remaining 12, located in Georgia, Texas, Florida, Massachusetts, Florida and Pennsylvania. The REIT would reinvest the proceeds in real estate in its key markets on the West Coast.

The price, about $115 a square foot, is “good for office space,” said Hartung, adding that it’s unclear how much of the portfolio is office space and how much is industrial.

The terms of the acquisition include cash and between $75 million and $150 million worth of Spieker operating partnership units, convertible into Spieker stock.