Medical office building in Los Gatos draws big-time buyer

LOS GATOS — A Los Gatos medical office building that’s home to a Sutter Health operation has been bought by an alliance of two real estate groups with a nationwide reach.

The buyer is an affiliate that’s linked to an alliance of The Carlyle Group, a private equity firm; and Anchor Health Properties, a real estate developer and investment firm that specializes in health care properties.

The affiliate of Washington, D.C.-based Carlyle and Virginia-based Anchor Health paid $53.1 million for the office building, documents filed with the Santa Clara County Recorder’s Office on Jan. 7 show.

The medical office building is located at 15400 Los Gatos Blvd. in Los Gatos, according to the county documents.

15400 Los Gatos Blvd. in Los Gatos, site of a Sutter Health medical office building. (Google Maps)

The deal indicates that veteran investors hunger for Silicon Valley properties in choice locations that have sturdy tenants.

In this case, Sutter Health Palo Alto Medical Foundation, one of the Bay Area’s largest health care organizations, is leasing the building.

The seller was an affiliate led by Sand Hill Property Co., a real estate firm headed by developer Peter Pau. Sand Hill developed the building, which totals 40,000 square feet.

It appears that Sand Hill Property captured a significant profit through its sale of the building.

Sand Hill Property stated in a post on its website that the medical office was developed as a custom-tailored building for tenant Sutter Health.

“The total development cost was $26 million,” Sand Hill Property said in the web post. “The tenant invested another $20 million in its own improvements.”

Sutter Health describes the site as the health care firm’s Los Gatos Center, a complex that offers an array of services and care options.

“We provide comprehensive primary care, family medicine, internal medicine and pediatrics; urgent care services; on-site diagnostic imaging with ultrasound, CT scan and X-ray; and full laboratory services,” Sutter Health states in its description of the Los Gatos site.

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