Marketing and Leasing Update | November 2013

We are pleased to let you know about several positive developments at 151 Blue Ravine Road in Folsom, CA. The majority of capital improvements have been completed and we are engaged in conversations with a publicly traded company regarding a purchase of the building. Below we provide additional detail relating to the project improvements, operation and leasing activity for the building.

 

Building Improvements

 

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Temporary Lighting

We have now completed the demolition of the existing interior improvements, and the project is in show-ready condition. As an effective (but low cost) means of illuminating the project interior for tours we have re-installed some of the existing fixtures.

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Building Repairs & Maintenance

When we acquired the project, a number of the wood rafters (which extended beyond the roofline) contained dry rot. To repair this condition, we trimmed the rafter edges flush with the roofline, filled them as required, and repainted them. We also completed required roof maintenance, and are surveying repairs for the existing HVAC units.

Since acquiring the project, we removed an underground storage tank that backed up an emergency generator on the project. We have now back filled the area, and are working with Sacramento County to remediate the area and to receive a “closure letter” that will provide that no further action is required at the site for compliance with environmental laws.

 

Sale and Leasing Activity

 

Untitled3Untitled4 We are pleased to report that we are in advanced negotiations with a publicly traded company to purchase the building. Under the terms of our current deal, this company would purchase the project for $6,600,000. Obviously, we are still in the early stages of the deal and the terms may still change. But the entity is a sophisticated buyer, and at a minimum, the transaction is presumably a good indicator of market value. We will keep you apprised on the progress of this transaction.There are several other large tenants in the market in various stages of activity. We continue to actively pursue all requirements.

Marketing & Leasing Update | August 2013

151 Blue Ravine Road in Folsom, CA continues to attract significant tenant and user attention in the market. We have completed a number of improvements designed to increase the building’s marketability, with additional improvements and planned upgrades underway. We have had active dialogue with several prospects, and are presently engaged with a high quality tenants. The activity and feedback from prospects about the project has been positive, and we are excited about the prospects for the building. Below we provide additional detail relating to the project improvements, operation and leasing activity for the building.

 

Building Improvements

 

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Demolition

The large demolition project to eliminate the outdated improvements used by California ISO, the former tenant, is now complete. The building interior is open, clean and brings the building to a “shell condition,” which makes two desirable building features – a seismically reinforced structure and high ceilings – visible to prospective users. The executive office area and main infrastructure – 4,000 amps of power, capacity for 976 tons of cooling, a 2,000 amp back-up generator and associated Automatic Transfer Switches are still in place. These features are also attractive to prospective tenants. To date, Tenant feedback has been positive for the layout and condition of the building.

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Building Repairs & Maintenance

In addition to the demolition, other budgeted capital projects have been completed or are in process. In June we removed two unhealthy liquid amber trees and thinned 22 more (for safety and aesthetics). We are currently repairing the wood rafter tails to remove dry rot and seal the ends, and making roof repairs and have implemented a regular preventative roof maintenance and repairs plan. The building continues to show well.

 

Leasing Activity

 

Untitled2Untitled3Untitled4 We continue to be engaged in ongoing dialogue with several tenants:

VSP – VSP (Vision Service Plan), a publicly traded insurance company and manufacturer of eye products, has a requirement for 80,000 to 100,000 sf. We toured several senior executives from VSP in March and recently we had two more tours with senior executives. They have requested CAD plans of the building to generate layouts. They are still looking at possible build to suits, but timing and cost issues make existing buildings a better alternative. According to our brokers we are in a very good position for this requirement and we continue to work actively to bring this transaction to Blue Ravine.

Other Tenants in the Market

 

State of California – The State of California has toured the building to fill a + 70,000 square foot requirement. The latest information is that this requirement has shrunk from 80,000 to 46,000 sf. In addition, they may either renew or consolidate with another agency.

Agilent Technologies – We responded to an RFP from Agilent Technologies, and toured the local Facility Manager and nine senior individuals from Agilent through the project earlier this year. Over the last several months they have been working internally on budgeting for the requirement. They have decided to expand their existing Blue Ravine facility by 15,000 feet. Our proximity directly adjacent to their current facility will continue to give us an advantage in the event their plan for on-site expansion fails to materialize or they need future expansion.

Travelers Insurance – Travelers Insurance is in the early stages of a possible relocation from Rancho Cordova. They are looking for +70,000 square feet.

There are several other large tenants in the market in various stages of activity. We continue to actively pursue all requirements.

Marketing & Leasing Update | May 2013

We continue to be excited about our acquisition of, and the prospects for 151 Blue Ravine Road. The building is a 79,000 square foot office project located at 151 Blue Ravine Road in Folsom, CA which we acquired December 12, 2012. We have already completed a number of improvements designed to increase the building’s marketability, and more are underway. We have been actively marketing the project, and have engaged with several high quality tenants.Below we provide additional detail relating to the project improvements and marketing activity.

 

Building Improvements

 

Front Landscaping

When we acquired the project, the landscaping at the entrance to the building was overgrown, obscuring views of the entrance from the street. As part of an overall landscape upgrade, we removed a large, diseased pine and several other trees, replacing those trees with smaller, ornamental trees and annual flowers. The tree removal/re-planting, in combination with cleaning and reactivating the water feature, opened up the building entrance and significantly increased the project’s curb appeal.

Demolition

Though Intel was the original tenant in the project, it was used most recently by PG&E (and CAL ISO) to manage the power grid for large portions of the State of California. That use required the installation of significant infrastructure including backup power sources, raised data floors, etc. The combination of those improvements (most of which were outdated) and a complex floor plan made it difficult for prospective tenants to envision how the space could be conformed to their particular use. Our demolition plan, which is largely complete, accordingly called for removing the bulk of the outdated equipment, leaving certain perimeter offices, and restoring the remainder of the building to clean, open space, with window-to-window views.

A Valuable Find

While removing outdated pieces of equipment, we discovered that an existing 2000 amp emergency back-up generator initially thought to be obsolete, is actually in excellent condition (with only 190 hours of run time), has a renewable air quality permit and is quite valuable. Since it is very likely a future user will require an emergency generator, this should provide an additional economic benefit and has already factored into discussions with prospective tenants.

 

Leasing Activity

 

Due to its prime location and amenities, 151 Blue Ravine Road has attracted interest from the following tenants:State of California – In January 2013, the State of California toured the building to fill a + 70,000 square foot requirement. We have responded to the State’s RFP, and are awaiting feedback.VSP – VSP (Vision Service Plan), a publicly traded insurance company and manufacturer of eye products, has a 70,000 – 80,000 sf requirement. We toured several senior executives from VSP in March. They recently purchased the Zurich Insurance building in Rancho Cordova (which is nearby), but may likely have additional space requirements. VSP is reportedly finalizing their analysis of their corporate real estate needs, and will be back to us once that analysis is complete.Agilent Technologies – We recently responded to an RFP from Agilent Technologies, and toured the local Facility Manager and nine senior individuals from Agilent through the project. The Blue Ravine project is directly adjacent to their current facility, and appears to be both a fit for their needs and the only building they are currently evaluating. While the facility reportedly is ideal for their purposes, moving forward would involve three Agilent business units (including one that would need to be relocated from another part of the state), and the decision is now accordingly with upper management at Agilent.Travelers Insurance – Travelers Insurance is in the early stages of a possible relocation from Rancho Cordova. They are looking for +70,000 square feet, and are expected to tour the building the week of May 19th.

We will keep you apprised of the state of our capital improvement plans and any leasing activity in future reports.