(Click to Enlarge)
In an off-market transaction, CapRock Partners acquired a non-performing note at a significant discount to par value from a publicly traded bank that was secured by a best-in-class, approximately 237,933 SF industrial building located in the East Bay area of Northern California. At the time of CapRock acquiring the non-performing note, the borrower was in bankruptcy and the lender and borrower were in litigation. As a condition of acquiring the non-performing note, CapRock was required to close the transaction all-cash in only twenty-five (25) days. Upon acquiring the note, CapRock assumed the lender’s litigation with the borrower and within one year CapRock successfully obtained relief from stay, foreclosed on the property to perfect fee simple title, and evicted the tenant who was an affiliate of the borrower.
At the time of acquisition, the East Bay market was still recovering from the financial crisis and the industrial vacancy rate was in the double digits. However, upon further examination, the size range between approximately 150,000 SF – 250,000 SF in this submarket had virtually no vacancy. The investment thesis that a high caliber Silicon Valley related technology company would need this building – even though market vacancy appeared high –proved correct. In less than two years, CapRock successfully transformed a non-performing note that was in bankruptcy and in a contentious lawsuit with the original lender into a high performing real estate asset that was sold to a top tier technology company.
- Off-market acquisition from a publicly traded bank
- Best-in-class property
- Acquired significantly below replacement cost
- Non-performing note that was in bankruptcy and in litigation with publicly traded bank
- CapRock successfully obtained relief from stay, foreclosed on the property, evicted the tenant, and sold to a high caliber technology company
- All-cash transaction