BRE Properties is a San Francisco based apartment REIT that owns 85 properties containing about 24,000 rooms. It acquired Red Hawk Ranch from M. H. Podell in 1997 for $57 million. The development sits on 18 acres on the north side of Central Park in Fremont's CBD.

The construction defect lawsuit was filed in 2003. The Superior Court of Alameda County signed off on the mediated settlement earlier this week, negating the need for a trial that had been set for May. The settlement payments will be released to BRE from escrow subsequent to a 20-day appeal period. The settlement does not include claims associated with three subcontractors against whom BRE intends to continue litigation.

Lange tells GlobeSt.com that prior to the discovery that every building in the complex had been compromised by moisture penetrating the building envelope, the property was at or above 95% occupancy and NOI had stabilized at about $5 million per year. Occupancy and revenue dropped considerably after the discovery and is currently at 75%. NOI for 2006 is expected to be in the $2.5-million range. Repairs got under way last spring and will take another 18 months to complete. Buildings are being shut down two at a time, says Lange.