Case Studies.Sourcing Build-to-Suit Opportunities (Industrial)
Restoration Hardware.

Capitalizing on strategic joint venture opportunities and development expertise created significant value for shareholders

Restoration Hardware – Patterson, CA


Class A Warehouse

Purchase Date


Transaction Size

1,501,388 SF
  • Challenge: Restoration Hardware, Inc. (“Restoration Hardware”) outgrew its West Coast distribution needs at its former 300,000 SF facility in Tracy, CA and it began seeking build-to-suit opportunities
    • The entitlement process within the city of Tracy was very onerous and caused unwanted delays, resulting in the tenant seeking other locations within the Central Valley
    • The tenant’s credit profile at the time (~$2.5bn market cap in 2014 compared to over $12.7bn as of May 21, 2021) was not viewed favorably by traditional construction lending sources. The lack of available development capital required a creative financing structure
  • Resolution: In 2015, Peakstone and Weeks Robinson Properties (“WR”) formed a joint venture (“JV”) and developed a build-to-suit distribution center for Restoration Hardware with a 15-year original lease term
    • Peakstone assisted in identification of a suitable site within Patterson, California (approximately 25 miles south of Tracy) and also leveraged its local relationships to facilitate a more seamless entitlement process
    • Peakstone financed over 90% of the construction costs with equity and debt-like components. The total project cost budget was $89.4 million ($60 PSF). WR was responsible for 50% of the land acquisition cost ($7.7 million) and GCEAR funded the remaining $81.7 million to complete construction. At the completion of the project in January 2016, GCEAR purchased WR’s interest in the JV based on a purchase price of $99.8mm ($66 PSF) or a 6.45% cap rate
  • Benefits: The property is now a mission critical facility for the tenant and operates as the distribution center covering Western United States through the Midwest