Project
Working with the city of East Palo Alto to develop a re-development area, the project involved the assembly of 35 separate parcels of land to create a prime development site of 12 acres along Route 101 at the key entrances to Palo Alto and Stanford University. The high quality of the design concept attracted the Four Seasons Hotel and the office buildings and retail were built in two phases. Despite losing a major credit tenant in the technology downturn in 2001, the project rapidly re-leased because of its superior quality capturing 50% of the leasing in its competitive set.

Investment
The land was assembled through a “Redevelopment Area Process” for $36 million.  Total development cost was $164 million ($361 psf). The peak equity investment was $68 million.

Value Creation
The average net rents achieved of over $40 psf resulted in a net operating income of $20 million at stabilization, producing a sales price for the office buildings of $291 million, at a cap rate yield of just over 6%. The net rents achieved far exceeded the rent for prime space in downtown San Francisco. The Four Seasons Hotel development pad was sold for $8 million.  The development is recognized by its neighbors and the surrounding municipalities, as a vast improvement over previous land use and a tremendous success for the local community.