San Ramon-based Meridian Property Co. recently sold its 74,000-square-foot, multi-tenant office building in Pleasanton known as "The Atrium" to a private investor for $15.5 million.
The deal for the three-story building at 5776 Stoneridge Mall Road represented a cap rate of just under 7%, according to representatives of Meridian, which acquired the property less than two years earlier.
The Atrium was bought last month by Triuam Partners, LLC, a California limited liability company in San Francisco. The buyer's real estate representative did not respond to requests for comment about the sale.
Located across the street from Stoneridge Shopping Center and next to Wells Fargo Bank, The Atrium houses several dozen tenants such as Valley Pregnancy Center, Farmers Insurance offices and NorCal Investment Group, as well as law offices and counseling and consulting firms.
When Meridian bought the property in January 2015, the building was fully leased to more than 50 tenants with rents averaging about 25% below market rates, according to the company. During its ownership, Meridian renewed or replaced about 60% of the building's tenants and made more than $1 million in capital improvements to the interior and exterior.
"This presented an opportunity for Meridian to modestly improve a building that had been owned by the previous owners since 1992," Dan Rosenbaum, senior vice president of Meridian's general office division, said in a statement.
"With an average tenant size of less than 2,000 square feet and loyal, long-term tenants, our plan was to increase the average rent in the property towards the prevailing market rent while giving tenants more value with our improvements," he added.
"This acquisition, reposition and sale are a perfect model for the value-add general office platform that we formally launched when I joined the firm this past spring," Rosenbaum said.
Vince Schwab and Collin White of Marcus & Millichap Co., based in the firm's San Francisco office, represented Meridian in the sale proceedings.
The Atrium generated "a lot of attention from high net worth buyers" when it was on the market, according to Schwab.
"Since the building was made up of numerous smaller tenants, there was no significant rollover risk, which made the asset appealing to buyers familiar with multi-family assets," he said. "There were several offers and what set this buyer apart was his willingness to release hard money upon opening escrow, coupled with a competitive price and quick due diligence."
Meridian, a division of Marcus & Millichap, focuses on general and medical office spaces. It has more than 150,000 square feet of property in development or redevelopment and another 500,000 square feet in the acquisition pipeline, according to chief operating officer John Pollock.