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OAKLAND, CA-Walgreen Co. has signed a 10-year lease for 14,000 square feet on the ground floor of 1333 Broadway, a 10-story, 238,000-square-foot tower atop the CityCenter BART Station. The drug store chain will reportedly move its existing store across the street (at 1330 Broadway) into the space. The company expects to be up and running in the new location sometime during the first quarter of 2010, according to CIM Group.

At least part of the space Walgreen is taking used to be occupied by a Gap store that left more than one year ago. The brokers involved declined to divulge the negotiated lease rate. An October 2008 listing for the space on rofo.com showed a triple-net asking rate of $2 per square foot per month, which equates to an annual full-service rate in the mid $30s per square foot.

It wasn’t immediately how much retail space remains available at the property and whether the Walgreen store would help fill other retail vacancies. CIM principal Jeff Kreshek was unavailable for comment.

CIM paid Brandywine Realty Trust some $412.45 million last summer for 1333 Broadway and four other Downtown Oakland office buildings totaling 1.7 million square feet in the Lake Merritt and City Center submarkets. The other acquired buildings are 2100 Franklin (215,000 square feet; nine stories; LEED-Gold), One Kaiser Plaza (530,000 square feet; 28 stories; known as Ordway), 1901 Harrison St. (272,000 square feet; 16 stories), and 2101 Webster St. (475,000 square feet; 20 stories).

As part of the deal, an affiliate of Brandywine was given a one-year managing and leasing contract for the entire portfolio. At the time of the sale, CIM told GlobeSt.com the portfolio’s vacancy was approximately 11%, not including 2100 Franklin, a $78.5-million ground-up development that was completed in fall 2007 and, while now 18% leased, remains unoccupied.

CIM’s purchase from Brandywine included the assumption of existing mortgage loans on three of the properties (1333 Broadway, One Kaiser Plaza and 1901 Harrison) totaling $95.3 million, and a $40-million, interest-free loan secured by the first mortgage on 2100 Franklin and 2101 Webster. All four loans carry interest rates in the low-to-mid 5% range and come due in 2010, according to SEC filings.

Also as part of the deal, CIM Group was granted a 15-year option to purchase a land parcel adjacent to One Kaiser Plaza slated for the 650,000-sf Two Kaiser Plaza office building, and has committed to lease to CIM 150 parking spaces on that same parcel for tenants of the building.

The portfolio furthers CIM’s Oakland investment program, which was launched in June 2007 with the $66-million acquisition of the 484-room Oakland City Center Marriott and the 162-room Courtyard Oakland Downtown. The two assets are located adjacent to each other three blocks from the heart of Downtown Oakland.

In February, Walgreen Co. agreed to acquire 12 Rite Aid locations, seven in San Francisco and five in eastern Idaho. While some Walgreens and Rite Aid locations will be combined, the company said it will have a net increase in the number of locations it operates in both markets once the transaction is completed. The acquired San Francisco locations are as follows: 1300 Bush St.; 5280 Geary Blvd.; 776 and 1496 Market St.; 200 W. Portal Ave.; 1830 Ocean Ave.; and 3931 Alemany Blvd.

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