Case Study

Summary

696 E. Trimble Road is located at the junction of Montague and E. Trimble Roads in northern San Jose, and in close proximity of Interstate 880 and Highways 237 and 680.  The property consists of one warehouse containing 206,642 SF and is situated upon 13.27 acres providing a building coverage of 36%. The project benefits from 30’ clear height and a large yard area for car parking and trailer storage.

Situation

  • In 1970, the building was constructed as a build-to-suit for a printing company.
  • In 1998, the property was foreclosed upon by lender.
  • In 2000, Swenson acquired the property vacant from lender for $12 million, and subject to an environmental remediation plan.
  • Shortly after Swenson completed its renovation of the property, a 10 year lease was made with FedEx Ground for approximately 65% of the property, with the balance leased to three other smaller tenants.
  • For several years, Orchard Partners made unsolicited proposals to acquire the property directly with the owner.
  • In 2011, Orchard Partners approached Swenson to see if they would entertain selling the property.
  • Given the near-term leasing exposure of FedEx Ground and deferred maintenance at the property, the owner made the decision to market the property directly to a few prospective institutional buyers.
  • In response to Swenson placing high value on closing with no price adjustments, Orchard Partners advanced its due diligence in order to provide assurance to Swenson that it would close quickly.
  • In 2012, Swenson selected Orchard Partners and Bentall Kennedy based upon a purchase price of $26 million or $125/SF.

Results

  • Concurrent with its due diligence, Orchard Partners worked to secure a long-term extension with FedEx Ground for the entire building and a No Further Action letter.
  • Prior to closing, Orchard Partners confirmed that it had adequately budgeted for deferred maintenance of the property, including truck court repaving, renovation of office space, roof repairs, seismic retrofit, and upgrade of sprinkler system.
  • Following receipt of the NFA, closing occurred with no price adjustment.
  • In 2016, ownership sold the property to a 1031 exchange buyer for $63 million or $306/SF.
  • In March of 2022, worked with ownership to secure long term financing in order to acquire the adjacent four acre parcel from Swenson and facilitate a long term lease with FedEx Ground.