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BRISBANE, CA-Page Mill Properties has sold the 218,000-sf Hitachi building here to an undisclosed Bay Area-based investment group for $38.7 million after just eight months of ownership. Page Mill Properties, a $290-million commercial real estate investment fund sponsored by San Francisco-based Divco West, purchased the property in early January of 2005 for just under $30 million.

Completed in 1988, the building has 10 tenants. The anchor tenant, Hitachi America Ltd., used to own the building and still houses several of its divisions in about 60,000 sf there.

“The offer we received and ultimately accepted was unsolicited, and represented the increase in value on that property that we were expecting over the anticipated five-year hold period,” says Divco West co-founder David Taran. “Given current market dynamics in and around that particular location, we felt that the timing was right to sell this asset.”

The 12-story class A office tower was 53% leased when Page Mill acquired it in January. In March, the biotechnology firm Tercica signed a six-year lease for 28,278-sf on the third and fourth floors of the 12-story office tower, taking the building to 61% leased. The lease commenced in June, though the lease agreement is said to have included several months of free rent in addition to an above-standard tenant improvement allowance.

“Sometimes the hold period is short, and in some markets it can be significantly longer,” says Divco co-founder Stuart Shiff. “The key in both scenarios is underwriting the downside properly from the outset. And even then, it helps to be lucky.”

Page Mill acquired the property from Shin Yen, the local operation of an overseas high-net-worth family that acquired the building in early 2004 from Younan Properties for about $23 million. Younan says he acquired the building in late 2003 from Hitachi for about $22.8 million.

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