It has been too long since we have posted an update-- only good news to report. Our three new tenants-- Kamus + Keller, Sachs Marketing and 401K Advisors-- are all in occupancy and paying rent as of 2/1/14. In addition, we have signed three new leases. The first tenant is MDF Instruments, a medical instrument sales company that has leased 2,735 sq. ft. at $2.15 psf, and they will move in March 1. The second is Sunstone Properties, a multi-family real estate investment company, that will be taking 1,825 sq. ft. at $2.15 psf-- hopefully they will move in around March 1 as well. Our biggest news is that we signed the lease with Cal Lutheran University for 17,763 sq. ft. last week. It was a long, complicated lease negotiation, but worth it because we have a very stable, long-term tenant that will add prestige and credibility to our property. Taking about 27% of the project, they will have two uses: their Executive MBA Program, which has a new business incubator component, and counseling rooms for their Counseling school. It is a 10 year lease (with an option to terminate after 5 years with a hefty termination penalty) starting at $2.15 psf with six months of free rent. We are working on the construction plans for the space, and hope to have them in occupancy by June 1.
These three leases bring the property to over 70% leased. With this, we are able to move forward with our Phase II renovation (completing the project), which will include finishing the landscaping and adding in the secured bike parking, renovating the restrooms to bring them into ADA compliance and adding one set of showers (for those who work late or bike to work), and replacing the rest of the railings and upgrading the walkways and hallways. We expect to start the work in the next several weeks, and it will take about two months to complete.
In the meantime, we have a great deal of leasing activity for our remaining space. We expect to report another large lease by the end of the week, which will bring us over 85% leased. Then we have just three suites available, totaling about 11,000 sq. ft. We are going to put those suites in move-in condition, so we can lease them quickly-- hopefully within the next couple of months.
As we detailed before, Members are accumulating their 8.5% preferred return as of January 1, 2014. As soon as the property is over 85% leased and occupied, we will refinance into a 10 year loan-- hopefully before rates go up too much more. We anticipate starting distributions by the end of the summer.
