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Basin Street expands Reno investments with $18 million purchase

PETALUMA, June 26, 2006 – Basin Street Properties today said it made its second major acquisition in Reno, Nev., with the purchase of the 120,000-square-foot Wells Fargo Building for $18 million.

The deal follows Basin Street's purchase of a 12-story Bank of America Plaza office tower for $34.6 million in December. It's also part of continued company interest in the Reno commercial real estate market, according to President Matt White.

"Reno is a major growth market in the western U.S., and Basin Street is actively pursuing strategic real estate opportunities in its urban core," Mr. White said.

Basin Street purchased the Wells Fargo Building, located at 200 S. Virginia St., from Christiana Investments, LLC. The building is 80 percent occupied to Wells Fargo, Dean Witter, Quest Communications and other telecommunications companies. Basin Street plans to upgrade the parking lot and electrical and climate-control systems as well as renovate the corridors and vacant suites.

A small part of the acquisition funds came from an exchange following the sale of the second office building at Fountaingrove Executive Center in northeast Santa Rosa to Equity Office Properties Trust for $9.2 million in April, according to Mr. White. The rest came from new investors.

Though Basin Street's history includes being the largest commercial real estate developer in the North Bay, its primary focus now is on acquiring existing assets with development opportunities so the company doesn't have the current cost risks associated with construction, according to Mr. White. Accordingly, Basin Street is exploring development and redevelopment prospects connected to existing income-generating properties in Reno.

The company currently has two major office projects under construction: Harvest Business Center in north Santa Rosa and Redwood Business Center in Petaluma. Reaching completion through the end of this year are apartments and commercial space in the Theater District redevelopment project in downtown Petaluma.

"We got under the wire on costs on Harvest and Redwood, but we're not actively looking for development opportunities in Sonoma County," he said.

Harvest is set for completion in four months and has several potential leases under negotiation. Redwood has three leases pending signature.

"The office and service commercial sectors of Sonoma County are performing better than in the last five years, since the telecom blowup," Mr. White said.

He points to the best-located properties achieving rents of $2.50 to $2.75 a square foot per month on a triple-net basis for Petaluma retail space and $2.60 to $2.70 full-service for central Petaluma office space.

Basin Street still owns two parcels in the Fountaingrove Executive Center development and is considering breaking ground on 50,000 and 80,000 square foot office buildings there before the end of this year, according to Mr. White.