The SFO Logistics Center is located at 1070 San Mateo Ave., one-quarter mile from the San Francisco International Airport and close to the confluence of interstates 280 and 380, and the Bayshore Freeway. The building has historically been used as a federal government services distribution center. However, those tenants have been vacating the space over the past two years. Occupancy in the existing building is now approximately 11%, due largely to its current state, according to local sources.
Holliday Fenoglio Fowler says it arranged $56.34 million in financing through Capmark Finance and that the loan represents 70% of the total project cost. The 36-month, non-recourse adjustable-rate loan floats 325-basis points over the 30 Day LIBOR index. HFF's California executives Peter Smyslowski and Scott McMullin were the lead arrangers.
"The deal got me excited because it attracted a good amount of capital interest," Smyslowski tells GlobeSt.com. "A key component of the deal is that despite the loan size the lender did not require any syndication or flex language. The lender felt this was a strong enough market that once the sponsor completed the building upgrades it would lease up quickly."
The CapEx plan includes better ingress and egress, more loading docks, additional parking and structural upgrades. Once the work is completed, the expectation is that the space will lease up for between $1- and $1.10 per sf per month, NNN. The property is expected to lease up quickly once improved because there is a dearth of large, close-in quality industrial spaces.
"The borrower realized an opportunity to take an existing asset with strong distribution qualities and an irreplaceable location, and add immense value by merging the property with the adjacent site, which will greatly enhance the distribution and logistical qualities of the asset," Smyslowski says.
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