THE ALHAMBRA in ALHAMBRA, CALIFORNIA

Our Opportunity

Acquired in November of 1999, the 45-acre former corporate campus of CF Braun Engineering in Alhambra, California consisted of approximately 950,000 square feet of office space which was roughly 35% vacant and 20-acres of open parking lots. The development strategy was to protect, enhance and expand the campus, creating a vision of a modern urban community.

The first step was to brand the project providing an identity to the office campus (“The Alhambra”) which would lead to increased occupancy, beginning with a 200,000 square foot lease to the County of Los Angeles. The second step was to entitle the entire 45-acres to allow for retail uses on the seven acre site known as the West Lot and a mix of uses on the main 38-acre campus, including schools, retail (including a fitness center) and residential. The third step was to develop the campus in accordance with those entitlements, beginning with the development of the 120,000 square foot, Khol’s-anchored, “Shops at The Alhambra” on the West Lot. Next, over 200,000 square feet of leases were executed on the office campus with various education institutions like USC’s Keck School of Medicine, in addition over 200,000 square feet of office space to multiple other corporate tenants resulting in the campus achieving a 94% occupancy of its office space in late 2006. Then a specific plan was approved allowing for the construction of 311 residential units (townhouses and flats) on the north-easterly portion of the site. Lastly, a 50,000 square foot LA Fitness building was construction along with a new 760 car parking structure on the north-westerly portion of the campus.

With the construction of the residential project, we will have truly achieved our vision of an urban community.

Our Investment

Originally financed with $59 million of debt provided by iStar Financial and $19 million of equity provided by a partnership between The Ratkovich Company, Lehman Brothers and Wachovia. Sold to a new partnership between The Ratkovich Company and CIGNA in June of 2006, iStar Financial provided a new loan in the amount of $84 million, with the partnership providing equity of $30.5 million. Once the office space was substantially leased and the retail developed, iStar was taken out with new debt provided by MassMutual in the amount of $98.6 million. In June of 2006, the project was sold to a new partnership between The Ratkovich Company and AIG-GRE. Debt in the amount of $130 million for the office campus was provided by Goldman Sachs, and $6.2 million provided by CSFB for the retail center. The new partnership contributed $60 million of equity.

The Results

Over all, The Ratkovich Company and its partners received an IRR of over 23.21% since the acquisition in 1999 while the project increased in value from $78,000,000 to $202,000,000 today.

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