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OAKLAND, CA-Kaiser Permanente confirmed Thursday that it will keep its national headquarters in the Ordway Building, where it has been since the building was completed in 1971. The city’s largest private employer says it signed a nine-year lease for 336,321 square feet of the 530,000-square-foot, 28-story building. A source with Kaiser says the agreement replaced its existing lease commitment, which wasn’t scheduled to expire until 2013.

One local broker tells GlobeSt.com he had heard the negotiated lease rate on the “blend-and-extend” deal was approximately $33 per square foot. Given the age of the asset, the quality of the tenant, the size and length of its commitment, and the economy, other sources tell GlobeSt.com that such a rate would have to be the full-service number because the triple-net asking lease rate for the building is $31 per square foot and Kaiser would warrant a big discount. Moreover, Kaiser says it negotiated a “favorable” lease rate, and a net lease rate in the low $30s could not be considered favorable. In addition to a competitive lease rate, local sources say Kaiser’s deal likely included the ability to give back space after a certain number of years without penalty.

Kaiser Permanente occupies seven buildings in the downtown area and is in the process of expanding its care delivery operations in the city. In May, the organization opened a new Medical Office Building and Cancer Care Center. Additionally, construction for the Oakland Medical Center recently began at the corner of Broadway and West MacArthur Boulevard. The new hospital is scheduled to open 2013.

The Ordway Building was built for Kaiser Industries and is wrapped in Kaiser aluminum. It is named for A. B. “Ord” Ordway, the longest tenured employee of industrialist Henry J. Kaiser’s global empire. Ordway brought in the doctor who co-founded Kaiser Permanente with Kaiser.

Brandywine and Colliers Parrish negotiated the lease on behalf of CIM Group. Jones Lang LaSalle represented Kaiser. None of the brokers involved could immediately be reached for comment.

The Ordway was one of five Downtown Oakland office buildings CIM Group acquired in December from Brandywine Realty Trust. CIM paid $412.5 million for the 1.7-million-square-foot portfolio. In addition to the Ordway, the purchase included 1901 Harrison Street (272,000 square feet; 16 stories), 1333 Broadway (238,000 square feet; 10 stories; above BART station), 2101 Webster Street (475,000 square feet; 20 stories) and 2100 Franklin Street (215,000 square feet; nine stories; LEED-Gold).

The purchase price included CIM’s assumption of existing mortgage loans on three of the leased properties totaling $95.3 million, and a $40-million, interest-free loan secured by the first mortgage on 2100 Franklin and 2101 Webster that was scheduled to mature on Aug. 2, 2010. At the time of the sale, the loans are secured by 1333 Broadway, One Kaiser Plaza and 1901 Harrison, according to SEC filings. The loan on 1333 Broadway totaled $23.88 million and was scheduled to mature in May 2010; the effective interest rate was 5.54%. The One Kaiser Plaza loan totaled $45.32 million and was scheduled to mature in August 2010; the effective interest rate was 5.29%. The loan on 1901 Harrison totaled approximately $27.15 million and was scheduled to mature in November 2010; the effective interest rate was 5.29%.

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