Case Study

Summary

Lafayette Terrace is a Class-A office building located in Lafayette, CA. The project is a three-story office building totaling 50,526 SF of space and situated upon 1.25 acres of land. The project was completed in 1985, and consists of steel-frame construction above two levels of subterranean parking.

Situation

  • Identified Lafayette Terrace early in cycle as office sector began to recover.
  • Opportunity to acquire the project at a high current return and substantially below replacement cost.
  • Significant lease expiration risk as roughly 70% of space in building was expiring in first 12 months of ownership.
  • Significant deferred maintenance of property.

Results

  • Identified a new tenant for 50% of project prior to close of escrow.
  • Raised equity, obtained acquisition financing, and closed on deal in under 45 days.
  • Completed extensive exterior repairs, updated all interior common areas, replaced roof and upgraded most mechanical systems servicing building.
  • Adopted energy efficient systems throughout building, and achieved LEED Certification.
  • Project has maintained high occupancy since it was acquired, and presently, is 100% leased, with over 70% of building leased long term to national credit tenants including Arthur J. Gallagher & Company (NYSE: AJG).
  • Following the departure of Arthur J. Gallagher in 2021, released all vacancy to eight tenants, including:  Assured Partners, Tetra Tech, Mill Creek Residential Trust, Dynamic Graphics, Cornerstone, Madison Park Financial, and Alameda Contra Costa Medical Association.

Overview