In October 2017, Vertical Ventures launched an offering for a 198,133 square foot, Class A office campus located in the airport submarket of Oakland, California. The business plan called for implementing capital improvements designed to attract new tenants and upgrade the buildings’ tenant base, allowing the property to compete on equal footing with–or even outperform–their competition within one year.
Strong Leasing Activity
Q2 2018 saw a significant amount of leasing activity, which was highlighted by the execution of a 10-year lease for 12,190 square feet, which, along with other smaller leases, helped push project occupancy to above 90%. The achieved leasing rates ranged between $2.25 - $2.50/sf, which was ahead of pro forma.
Capital Improvements Substantially Complete
As of Q2 2019, Vertical Ventures had completed a substantial portion of the capital improvements for the project including a new roof, new building lobbies, eight floors of upgraded common corridors, floor lobbies and restrooms, and new elevator cabs. Due to the significant progress made with the business plan, on both the leasing and renovation fronts, Vertical Ventures decided to sell the asset and began the preliminary stages of disposition.
After an approximate two year hold, Vertical Ventures successfully completed the sale transaction in October 2019, outperforming the original underwritten projections.
A successful capital improvement plan implementation, strong leasing activity, and favorable submarket conditions created the opportunity for Vertical Ventures to exit the investment after approximately two years and achieve higher-than-projected returns for investors.
*Net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual returns on a realized investment may differ.
This report contains explanations of a series of events associated with the Oakland Airport Plaza offering that resulted in an approximate 41.9% (net of most onerous fees) IRR to investors (including those from the CrowdStreet Marketplace). Certain aspects of the report such as dates of major events and the final outcome are easily verifiable while others, particularly underlying reasons behind the sponsor’s business plan execution, are not.
The report partially relies upon the sponsor’s explanations, the information contained within sponsor-produced quarterly reports, and conference calls. This analysis is not an assertion of independently verified facts but, rather, is for informational purposes only, to convey CrowdStreet’s understanding of what transpired.
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