SANTA ROSA and PETALUMA – Ten office buildings in Petaluma and five in Santa Rosa totaling nearly 400,000 square feet were given back to lenders recently as part of The Blackstone Group's effort to keep afloat a nearly $5 billion securitized commercial property loan connected to the record-setting acquisition of Equity Office in 2007.
Those 10 Petaluma buildings, located in Redwood Business Park, were part of Equity Office's $263 million purchase of 1.43 million square feet in 44 buildings in Sonoma and Marin counties from Basin Street Properties in 2005. The purchase price for those 10 buildings included the assumption of $35 million in loans at 7.41 percent interest and cash-flow requirements.
"They are keeping the 'gems' where Alcatel has leases," said Steven Leonard of Cassidy Turley BT Commercial.
Not included from Redwood Business Park were three buildings under lease and partly occupied by Alcatel. Equity Office assumed $23.3 million in debt on those buildings.
The $17.1 million loan balance on five of the troubled 10 Petaluma buildings went into default in October with a 0.1x debt-service coverage on the loan, part of the Credit Suisse First Boston Mortgage Securities Corp. series 2002-CKS4 commercial mortgage-backed security, according to an April report by Fitch Ratings. LNR is the special servicer.
The five buildings in Santa Rosa are the 68,000-square-foot Parkpoint Business Center on West College Avenue. Equity Office purchased it in 2005 from Bedford Property Investors.
According to Fitch's March report on the CMBS deal Morgan Stanley Capital I 2005-HQ5, of which the cash-flow encumbered Parkpoint loan is securitized, the property was transferred to special servicing by Wells Fargo Bank also in September with 64 percent occupancy and a 0.82 debt-coverage ratio.
Grubb & Ellis and CB Richard Ellis are managing the recently transferred Equity Office assets in the North Bay.