For Sale by Receiver: 336,000-SF Mervyns HQ

HAYWARD, CA-Being sold by a court-appointed receiver, the 336,000-square-foot former Mervyn’s headquarters here is expected to sell for a fraction of the $196 per square foot it garnered at the height of the market in 2007 on the strength of a 20-year, $25-million fully-net lease commitment from the department store chain. The buyer was North 3 Holdings, which put up $21.5 million of equity and assumed a $41-million loan. Mervyn’s and North 3 filed for bankruptcy within days of each other in July 2008.

John Connolly, the court-appointed receiver in North 3′s voluntary Ch. 11 bankruptcy tells GlobeSt.com that the reason the secured lender isn’t taking back the property and selling it on its own is because it wants to avoid being liable for any heretofore unknown property deficiencies, such as any potential environmental issues, not that any have been discovered. “There are so many moving parts that the secured lender in this case has decided they want to stay out of the chain of title and avoid liability,” he says.

Located 15 miles south of Oakland at 22301 Foothill Blvd., near the confluence of interstates 238 and 580, the 8.8-acre property is a former department store that was converted into a four-story office building in 2001. It reportedly contains 1,100 workstations in plug-and-play condition as well as a cafeteria. Outside the building is surface parking for 327 vehicles and structured parking for an additional 720 vehicles. Holiday Fenoglio Fowler has the disposition assignment, which is being led by senior managing directors Gerry Rohm and Michael Leggett.