"SKG took assignment of the purchase contract at a below market price because the building was empty," Mitsanas tells GlobeSt.com. According to another source, once word got out that SKG had bagged Pinnacle, the developer of the building could only sit back and hope SKG didn't meet the necessary requirements such that it could cut its own deal directly with Pinnacle.

The would-have-been tenant that assigned its purchase contract to SKG was Republic Mortgage. As a result, SKG is now the owner of two office buildings under construction at the northwest corner of Seelinger Street and Diablo Avenue. Pinnacle signed a long-term lease for all of the smaller building and SKG will occupy all but about 20,000 sf of the larger building, giving the two buildings a combined vacancy of just 20% prior to occupancy.

The acquisition was financed with a $26-million loan from Deutsche Bank Mortgage Capital LLC. The loan was arranged by George Mitsanas and Christopher Funai of Newmark Realty Capital Inc., which also will service the loan for the lender. The loan was structured to accommodate a 90% loan to cost. In order to facilitate a 30-day purchase agreement, the loan was structured with a debt service and tenant improvement reserve accounts.