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SAN JOSE, CA-Legacy Partners has changed its mind about acquiring 488 Almaden Blvd., a vacant, 381,000-sf class A office building with a 1,100-slip parking garage it was said to have under contract as of late July. Multiple sources close to the transaction have told GlobeSt.com and others that Legacy backed away after being unable to obtain the financing terms it was seeking.

BEA acquired the 17-story building in April 2007 for $135.3 million or $355 per sf. Built by Sobrato Cos. in 2002, the building has never been occupied. BEA had spent an additional $6.5 million renovating the building in preparation for a mid-2008 move-in when it halted work in March after it became clear it would be acquired by Oracle, according to SEC filings. One month after the $8.6-billion transaction was consummated BEA put the building up for sale the through Eastdil Secured.

With Legacy’s alleged $275 per-sf offer now off the table, seller BEA Systems, acquired by Oracle in April, may have to accept per sf price closer to $250 per sf based on the previous bids that were submitted, according to local sources. Regardless of the acquisition price, the buyer would have to invest an additional $15 to $20 million to finish the building’s interior office space for tenancy as most of it remains in shell condition.

The current class A asking lease rate in Downtown San Jose is approximately $33 per sf. Office vacancy in the market is approximately 20%. Legacy is the largest office landlord in Downtown San Jose with more than 1 million sf, or close to one-third of the class A market there. Its assets include Riverpark Towers, where it is in the midst of adding a second 300,000-sf office building on a speculative basis. Other Downtown Legacy assets include Almaden Financial Plaza and Horizon Center.

One obvious potential back-up buyer–among many local, national and international buyers, no doubt–is DivcoWest, which was rumored to be one of the companies outbid by Legacy. DivcoWest, through a representative, declined comment.

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