Located on Stevens Creek Boulevard at Finch Avenue, betweenCupertino Square Mall (formerly Vallco Fashion Park) and Interstate280, the property is considered of the largest undeveloped infillsites in Cupertino. "It's one of those undisputed,hole-in-the-doughnut kind of sites," CBRE senior vice presidentDonald Polishuk, who arranged the financing with CBRE Capitalmarkets EVP John Nelson, tells GlobeSt.com.

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Without that kind of site and without the reputation of theoperating partner (Sand Hill) and the co-investor (PREI), closingthe financing on the property would have proven much more difficultin the prevailing real estate credit markets, Polishuk says. "Banksare being very conservative while they try to get a handle on anypotential losses and the direction of the commercial mortgagebacked security (CMBS) market," he says. "The uncertainty in thesecondary loan market has resulted in significantly higher loanspreads and more conservative underwriting, including requiring notonly that developers and buyers put more equity into their dealsbut also that the developers and buyers themselves have anextremely solid track record. With strong sponsors and projectswith solid fundamentals we are continuing to get deals done despitethe turbulence in the credit markets"

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Prior to Sand Hill, Pennsylvania home builder Toll Brothers Inc.and local partner Keenan & Bariteau had sought to build 380condominiums and 113,000 sf of new retail shop space on the site,which totaled 25 acres at the time. The Cupertino City Councilapproved the project in March 2006 but folks against the projectobtained enough signatures to put the necessary rezone on theballet and voters shot it down in November of that year.

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By law, the Cupertino city council was prohibited fromentertaining a project like Toll's for the same site for the pastyear. Sand Hill Property put the property under contract when themoratorium was up this past November. By that time, however, HP hadsold eight acres to Apple, leaving 17.5 acres for Sand Hillcurrently zoned for retail, offices, light industrial and hotelsbut not housing.

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According to published reports, the people behind the successfuleffort to stop the project were concerned about too much newhousing overcrowding the city's schools, which may help explain whySand Hill and company may consider senior housing as the project'sresidential component. Pending City approvals, construction of theproject is scheduled to start as soon as the end of 2008 withcompletion scheduled for late 2009.

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Sand Hill has a strong reputation in the area. Last year onStevens Creek Boulevard, Sand Hill developed a new Whole Foodsgrocery store. In the late 1990s, it acquired Cupertino Village atWolfe and Homestead roads and turned it into a strong mixed-useproperty. Sand Hill carved out a portion of the site for a hotel,repositioned the remaining 114,000-sf center and sold it in early2006 for $65 million. Currently, the company is redevelopingSunnyvale Town Center.

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