Catholic Charities Unlocks Property Equity to Fund Mission Work with Sale-Leaseback
OVERVIEW
- 45,035 SF Sale-Leaseback of Converted Warehouse to Social Service Center
- Catholic Charities of the East Bay ("CCEB") is the seller-tenant
- LEC Advisors is the buyer-landlord
For more information regarding this case study, please contact:
DAVID KLEIN
Executive Vice President | Managing Principal
O (415) 828-2188
dklein@lee-associates.com
The Client
Catholic Charities of the East Bay (CCEB) is part of Catholic Charities of California, the largest charity providing human services in California. CCEB serves people in need living in Alameda and Contra Costa counties of the San Francisco Bay Area, keeping them housed supporting children, youth, seniors, and families in crisis and providing legal services on the path to citizenship.
The Challenge
When Lee & Associates was engaged to sell or lease the property, the 70-year old building was 66% vacant, needing over $1 million in needed upgrades in a deeply recessionary market. The property is in a location known for high crime, lack of city services, and homeless encampments adding to the marketing challenges. There was very little tenant demand for the challenged building nor interest in the vacancy. Moreover, due to COVID effects and the recession, charitable giving was down impacting the client's working capital. Consequently, the client did not have the funds to upgrade the building or the vacancy.
Our Approach
Upon engagement, Lee & Associates itemized the benefits of the property - high power supply, high clearance, off-street parking, near the UC Berkeley campus - and verified the building condition with an ESA Phase I, which concluded that there was no contamination present; a property condition assessment, which identified the deferred maintenance, code violations, and the cost to repair; and the true building size, which was determined to be 21% larger than reported to us by the client. Because the client wanted to remain in the building, our strategy was to sell rather than lease the building with the client leasing back its 15,000 SF space, as this would stabilize the buildings cash flow and enhance the value with the owner's strong credit on the lease.
The Outcome
In July 2025, the property was sold on a sale-leaseback for $4.7 million ($104/sf) all-cash, in as-is condition with deferred maintenance and code violations, to a local San Francisco based family office. The result yielded $3.1 million in cash to the client net of all transaction costs and avoidance of $1 million in rehabilitation costs. The 15-year leaseback is at a market rent with modest rent increases over the term assuring the client an acceptable occupancy cost over the lease term. In the event the client's business needs change, the client has a termination clause in the 40th month to exit the lease with no termination penalty.