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WALNUT CREEK, CA-A 500,000-sf mix of older and newer buildings here known as Ygnacio Center changed hands recently for between $167 million and $173 million, according to industry sources. Confirming the sale this week is New York-based Hypo Real Estate Capital Corp., which says it provided the buyer, a fund of Legacy Partners, $126 million in acquisition financing. The seller is believed to be Fidelity Investments, whose Pembroke Real Estate division developed the property.

Currently 89% leased, Ygnacio Center is located at the intersection of Ygnacio Valley Road and Northern California Boulevard in downtown Walnut Creek, approximately 25 miles south of San Francisco. Built out over 30 years, the four-building office complex adjacent to the Walnut Creek BART station consists of three mid-rise Class A office buildings, a two-story annex building and a parking structure.

Legacy Partners Realty Fund III plans to capitalize on the asset’s location and the lack of new development in the submarket while improving the quality of the asset, says Dana Valenti, a director with Hypo Real Estate. “Historically, Walnut Creek has been a more stable submarket than the overall San Francisco and East Bay markets, which have experienced peaks and valleys in occupancy,” Valenti says. “Due to the limited development opportunities in Walnut Creek and its close proximity to the BART and downtown San Francisco, we believe that this property is better able to withstand any potential downturn in the national economy.”

The Ygnacio Center buildings include One Ygnacio Center, a 156,002-sf tower at 1990 N. California Blvd. that was built in 1975 and includes the two-story annex, which was added in 1980; Two Ygnacio Center, a 180,410-sf tower built in 1985 at 2033 N. Main St.; and Three Ygnacio Center, a 162,863-sf building at 2001 N. Main St. that was built in 2001.

Current tenants in the complex include a mix of professional service providers including attorneys, certified public accountants, investment bankers, engineers and architects. On-site amenities include a 24-Hour Fitness branch, a Starbucks coffee shop and two cafés.

Details of the flexible, floating rate loan, such as the term, the rate and the loan-to-cost percentage, were not readily available. A Hypo Real Estate spokesperson at the parent company’s (Hypo Real Estate Bank International) headquarters in Munich, Germany, did not respond to a Monday morning email seeking the information.

In addition to existing assets, Foster City, CA-based Legacy Partners also has been investing in land in the Bay Area. Toward the end of 2007, the company acquired a 322-acre rock quarry in Pleasanton, CA, that may become mix of residential, retail, office and industrial sites. Legacy also is the master developer of the 60-acre Eden Shores project in Hayward, CA. Legacy envisions equal parts residential, retail and industrial.

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