Case Studies > 475 & 535 Oakmead Parkway – Sunnyvale, CA


475 & 535 Oakmead Parkway are two one-story office/R&D buildings totaling 112,310 square feet, located on adjacent parcels in Sunnyvale.

SITUATION
  • Orchard Partners purchased 535 Oakmead from RNM Properties.
  • The acquisition of 535 Oakmead included a “ROFR” option to purchase 475 Oakmead from a separate corporate seller.
  • Orchard Partners exercised its option to purchase 475 Oakmead shortly after closing on the 535 building, thus averaging down the total cost basis of both buildings.
  • At time of purchase, the 535 building was leased with 3 years remaining to McAfee while the 475 building was 100% vacant. The vacancy and short-term lease at the time represented a significant value creation opportunity in a rising market.
  • Both buildings required significant market ready work.

RESULTS

  • Immediately upon acquisition of 475 Oakmead, Orchard Partners executed a $1.98 million “market ready” upgrade plan. The building was subsequently leased, in a difficult leasing environment in 2009, to Alpha & Omega Semiconductor (NASDAQ: AOSL).
  • Following its lease expiration in 2010, McAfee decided to vacate 535 Oakmead in order to consolidate in their headquarters in Santa Clara, leaving the 535 building vacant.
  • Orchard Partners performed upgrades to the lobby, façade and landscaping of 535, significantly increasing its market appeal.
  • Orchard Partners leased 535 Oakmead to Palo Alto Medical Foundation on a long-term lease.
  • Shortly after execution of the leases, Orchard Partners sold the respective properties, one to an institutional real estate investor and the other a private family trust that was directly sourced by Orchard itself, at market-leading cap rates.

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