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BRE Acquires Pair of In-Fill Parcels

EMERYVILLE, CA-The San Francisco-based apartment REIT pays $13 million for two parcels here totaling 4.5 acres. Currently, the acreage houses three office buildings totaling 150,000 sf that will be converted to multifamily in phases.

By Brian K. Miller | Updated on July 21, 2005

EMERYVILLE, CA-BRE has acquired two urban in-fill parcels here for $13 million. The two parcels total 4.5 acres of land and hold three occupied office buildings totaling 150,000 sf that the San Francisco based REIT plans to convert to multifamily in phases.The company intends to maintain the current office use until development plans and public entitlements are finalized. The parcels are located approximately one-quarter mile from BRE’s existing Bay Vista development site, also in Emeryville.The acquisition was announced this week along with BRE’s second quarter results. In a Wednesday conference call, BRE executives said one parcel has on it a 28,000-sf office building that is about 50% occupied by a single tenant whose lease runs out in 24 months. The other parcel has two buildings on it, one about 80,000 sf and one about 43,000 sf. The larger property is 85% leased and the other is about 95% leased. One has leases that burn off nicely, which is to say they match the estimated entitlement process, while the other overhangs the entitlement process and may require leases to be bought out. The parcel with two buildings will be split into two parcels, they said.All of the buildings would be torn down and replaced with multifamily under the current plan. However, BRE executives said during the conference call they may end up developing apartments on one of the parcels and selling off the other two parcels, possibly to single-family residential developers. “We’ll need two or three quarters to work through (the opportunity),” said one executive. “Anything we do is going to have to meet a trended return threshold of between 7.25% and 7.5%.”

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