In one of the most substantial downtown San Jose deals in ages, a Chinese real estate giant has acquired a major high-rise apartment development site with plans to start construction next year.
KT Properties just sold its roughly 2-acre site at 190 W. St. James St. - which is fully approved for 643 units in two towers - to Full Power Properties LLC, according to title records. Sources who have been tracking the deal said the buyer is an affiliate of Guangzhou R&F Properties, a major landlord in China that has been increasing its activity abroad. The price was not disclosed.
Shaoyong Liu, a representative of Full Power Properties LLC, declined to discuss the new owner in detail, but said the company was excited to invest in the city.
"They want it to be a milestone project in San Jose," he told me in a phone interview from the company's San Francisco offices. "The next step is to get all the building permits and then start excavation next year. Definitely the new owner, Full Power, is going to build it."
Ken Tersini, president of Cupertino-based KT Properties, also declined to discuss the deal in detail or confirm the buyer's capital source.
He described the buyer as "the ownership vehicle that's going to continue to move the project forward at full speed," and added that his firm - which has already developed two high-rise towers downtown - "is going to continue to be very involved and active in the project on the development side all the way through completion. We're very excited about our association with Full Power."
The deal is a high-profile example in Silicon Valley of a growing capital source across the U.S. Chinese investment in U.S. properties zoomed tenfold from 2012 to 2014, jumping from $356 million to $3.2 billion, according to commercial real estate research firm Real Capital Analytics. So far in 2014, Chinese investment in this country had reached roughly $2.4 billion.
Skip Whitney, a partner with brokerage firm Kidder Mathews who heads up the company's China Services Group, said he expects more Chinese investment in the area. He said buyers from overseas understand high-rise projects, which often turn off some other investors.
"I believe it's going to help the profile of Downtown San Jose, which has been overlooked for many years," Whitney said. "And given the price per square foot in San Francisco, San Jose has great values."
The tower project - called Silvery Towers, in honor of the developer's father, Silvery Tersini - was fully approved back in March. It is located in one of the more primo spots in the central business district. It sits next to the historic Fallon House and across the street from the bustling San Pedro Square Market, which is one of downtown's more notable success stories in recent years.
Tersini said it remains undecided whether the complex would be for-sale or rental. Construction should start in the second quarter of next year and would take about 26 months. Both towers would be built "within a very close time sequence," Tersini said.
This is the third tower project for Tersini, who leads the company with his brother, Mark. They previously developed the Axis condo tower and One South Market, a rental tower that is under construction.
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