INDUSTRY: Real Estate
OPPORTUNITY: Value Add
LOCATION: San Francisco, CA
DESCRIPTION: Acquired 350,000 sqft, five-building Class A corporate Center for $72 million.
BACKGROUND: Lennar Properties acquired the property in the 90's with the intention of developing an additional 250,000 sq ft, but didn’t due to a complex entitlement environment and low occupancy (75%).
- Relocated a major real estate group’s west coast office to the site. This generated substantial brokerage traffic and introduced the newly renovated space to the local market.
- Invested $4.5 million in improvements.
- Re-financed with $60 million senior debt and $16.5 million from private investors.
- Approximately 60,000 square feet of existing, outdated tenant improvements were demolished.
- The fitness center was renovated including a new weight room, tennis courts and pool.
- Several broker open houses were held.
- Developed a broker incentive plan that increased occupancy to over 95% in 12 months.
PERFORMANCE: The project was sold for $92 million in 24 months to a national insurance company for a net profit of $15.5 millions. The annualized IRR to the investors – 21.1%.