NORTH BAY BUSINESS JOURNAL EVENT

Impact Napa

Tuesday, August 26, 2008, 8-10:45 a.m., Napa Valley Marriott, Napa

Best Places to Work 2008 Awards Reception

September 25, 2008, 5:30-7:30 p.m., Doubletree Hotel, Rohnert Park

E-Mail Express

Name:

Company:

E-mail:

Phone:

Basin Street plans future in other states

COMPANY PLANS TO STAY IN PETALUMA BUT IS EXPANDING IN NEVADA, OREGON

PETALUMA – Less than two years after selling 1.43 million square feet of office space in Sonoma and Marin counties, Basin Street Properties now has a larger portfolio than ever. But the company is planning much of its growth outside of the North Bay and even the state.

Basin Street, known for cradling telecom startups in its Redwood Business Park development in northeast Petaluma and kick-starting private redevelopment of that city's downtown area, now controls and manages 2.5 million square feet of commercial space and homes in Northern California and northern Nevada.

Basin Street tripled the size of its portfolio in the first half of this decade to about 2 million square feet in Sonoma, Napa and Marin counties via the Petaluma Theatre District project plus several office developments and acquisitions. In mid-2005, Basin Street sold most of the office buildings to Chicago-based Equity Office Properties Trust for $263 million. New York-based equity fund The Blackstone Group acquired Equity Office earlier this year.

Basin Street leveraged some of the proceeds of the sale to buy Golden Eagle Shopping Center and Legacy Marketing's office building in Petaluma.

In late 2005, the company turned its focus to Reno and has acquired two office complexes and a small shopping center there. In late April, Basin Street announced its first purchase in Sacramento.

Basin Street will remain based in Petaluma, where Bill White co-founded it in 1974, and is set to start construction on two hotels and up to three office buildings in the North Bay this year, according to President Matt White.

However, he isn't actively looking for new land or buildings to acquire in Marin and Sonoma counties and intends to sell the two remaining buildings Basin Street built in south Napa as well as another undisclosed property.

"We're still committed to developing and operating real estate in the North Bay and having our headquarters in the North Bay, but like so many other businesses in the North Bay we need to grow outside to meet our goals and objectives," Mr. White said.

Basin Street now targets second-tier markets – metropolitan areas with more private owners of commercial property than large investors. Also important are markets with a good spread between purchase price and the cost to build such a property, according to Mr. White.

So, Basin Street has steered clear of first-tier markets such as San Francisco and even Sonoma and Marin counties, where escalating commercial sale prices have squeezed margins for investors, he noted.

Almost all the capital going into new acquisitions now is coming from private investors, a project-funding model Basin Street adopted several years ago, according to Mr. White. Markets the company is looking to enter in the next 12 to 14 months include Portland, Ore., and Salt Lake City, Utah.

In preparation for the growing size of the portfolio, Vice President Scott Stranzl, who has overseen leasing and marketing, has moved to the nine-person Reno office, and former Equity Office North Bay leasing chief Matt Krupp was hired to handle that in the North Bay.

Modern communication devices such as e-mail-capable mobile phones allow the company to expand its portfolio without changing the structure of the company significantly, Mr. White said.

For more information, call 415-795-4477 or visit www.basin-street.com.

Book of Lists Online