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 The combination of those improvements (most of which were outdated) and a complex floor plan made it difficult for prospective tenants to envision how the space could be conformed to their particular use. Our demolition plan, which is largely complete, accordingly called for removing the bulk of the outdated equipment, leaving certain perimeter offices, and restoring the remainder of the building to clean, open space, with window-to-window views.

A Valuable Find While removing outdated pieces of equipment, we discovered that an existing 2000 amp emergency back-up generator initially thought to be obsolete, is actually in excellent condition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.