“One of the things very attractive to us is that a big chunk of the office vacancy is actually the best space in the project, the top five floors of 150 Almaden, and much of the retail availability is a newly renovated retail building in the center of the plaza,” White says. “In addition, we like the fact that the sellers just completed $24 million in improvements that we will reap the benefits of.”

BPG will invest an additional $10 million to complete the seller's repositioning and lease up the vacant space. The investment has been underwritten for a two-year stabilization period, but White says leasing activity suggests it might occur more quickly.

“We have multiple tenants looking at the top two floors of 150 Almaden, which are connected by an interior stairwell, and we also have prospective tenants interested in the retail vacancy,” he says. “If we made all the deals in the works–something we probably will not do–we would raise occupancy in the building to 84% in just the next 90 days.”

BPG acquired Park Center Plaza on behalf of its eighth fund, which recently closed its equity raise with $850 million equity investments. The seven-year fund is acquiring all of the real estate food types. White says approximately $150 million of the equity has been invested to date, using between 65% and 75% leverage.

The debt meltdown has actually been a boon to BPG's acquisition efforts, White says. “Those who were willing to take on mezzanine debt, push their leverage to 85% or 90% and outbid us for properties are finding that harder to do, and sellers are finding them more risky to run with,” he says. “There were firms that offered more for Park Center Plaza than we did but the seller selected us because our underwritting and financing assumptions were more realistic”.

Wells Fargo financed the acquisition for BPG. Michael Leggett and Gerry Rohm of Cornish and Carey Commercial brokered the transaction.