Borelli Investment Company Closing Out Ringwood Business Center

Three-building, 72,000 square foot business condominium complex sells 46 of 47 units in a little over one year

San Jose, California, January 9, 2006 — Borelli Investment Company has announced a virtual sell-out at Ringwood Business Center, a new 72,200 square foot, three-building business condominium complex in North San Jose.

Ringwood began selling its 47 business condominium units ranging from 750 square feet to 3,500 square feet just over a year ago, and at this writing, only one unit is left.

“Business condominiums are hot in general, and Ringwood units were in high demand from day one” said Ralph Borelli, president of Borelli Investment Company, developer of the project.  “Ringwood business condominiums allow owners to buy, not lease — building equity, while enjoying the tax benefits of property ownership. The concept makes so much sense, it’s a natural winner.”

Located in International Business Park

The single-story complex is well located in North San Jose’s International Business Park.  Borelli Investment Company purchased a prime parcel left over from a larger business complex next door, and then developed an attractive, modern-looking business center.  Ringwood owners have easy access to major transportation arteries such as I-680, I-880, and the Montague Expressway, and are less than five miles from San Jose International Airport. Ample parking exists on-site, with a ratio of four cars-per-thousand square feet of space.

“Demand has remained so strong over the past year that several investors have already bought and re-sold units with a substantial appreciation in value,” Borelli commented.  “We have quite a range of owners in the complex — including professional firms, contractors, a machine shop, and even a dental lab.  Ringwood is a great place to do business.”

Borelli Investment Company handles all owner upgrades as needed.  SBA financing — requiring only 10 percent down — is available through Mid-Peninsula Bank.  Borelli Investment Company also offers lease-to-own plans, which allow a business to make purchase decisions months or years down the road, with a portion of the lease payments applied to the eventual down payment.

For more information about the final unit at Ringwood Business Center, call Borelli Investment Company at (408) 453-4700 and ask for Lynn Hawkins, or e-mail lynn@borelli.com.

Borelli Investment Company is one of the oldest commercial real estate firms in the Santa Clara Valley. The company provides a full range of commercial real estate services — from development and construction management to land sales and consulting for sales and leasing. More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting http://www.borelli.com/.

Contact: Ralph Borelli, CEO Borelli Investment Company 1770 Technology Dr. San Jose, CA 95110 Ph: 408.453.4700 Fax: 408.453.4636 E-mail: ralph@borelli.com

www.borelli.com

Cost Segregation and 1031 “like-kind” Exchanges Doing Double Duty

Cost segregation and 1031 “like-kind” exchanges are both excellent tax-deferral strategies that can reduce your taxes. Taken together, the two methods offer even greater benefits for smart property owners.

Most owners of commercial property — from a large industrial building to the increasingly popular business condominiums — are aware of the value of IRC Section 1031 exchanges. In these transactions, commonly known as “like-kind exchanges”, owners dispose of business or investment property through a qualified intermediary, and the proceeds of the sale are used to purchase a replacement property of like kind. The transactions allow owners to defer taxes on all or a substantial portion of a gain on that sale. The replacement property typically has a carryover tax basis that is calculated by subtracting the gain deferred through the exchange from the value of the replacement property.

While 1031 exchanges have been around for a number of years, cost segregation is a newer, but now widely used tax-deferral strategy by commercial real estate owners. Cost segregation is the practice of identifying and segregating the depreciation of building components that support personal property or are related to the business activity rather than to the building itself. The building components that are reclassified from real property to personal property can be depreciated over substantially shorter time periods — ranging from 5 to 15 years — as opposed to 39 years for commercial property, using the standard straight-line method. Personal property can also employ accelerated, front-end loaded methods of depreciation, such as 200% or 150% declining balances, for even faster write-offs.

Essentially, cost segregation reflects the reality that while a building may well continue to be functional over four decades, there are many components — from carpeting and cabinets to landscaping and lighting fixtures — that will need to be replaced many times by then.

Cost segregation saves even smaller property owners tens of thousands of dollars through deferred taxes. A number of studies have suggested that as much as 25% to 30% of a property’s basis could be eligible for the accelerated depreciation. To make this determination, you’ll need the help of your CPA and perhaps an engineering consultant that can conduct the detailed study required.

Combining 1031 Exchanges with Cost Segregation

Recently, it has become clear that real estate owners can take advantage of both 1031 exchanges and cost segregation, enjoying the tax advantages of both strategies. According to an article in the Journal of Accountancy (August 2005):

In general, the definition of real property under section 1031 is determined by state law. In contrast, the definition of real and personal property for tax-depreciation purposes is determined under federal law. State law tends to classify fixtures in a building as real property. Therefore, property such as wall coverings, carpeting, special purpose wiring or other installations affixed to the building can be considered real property under state law and like-kind property for section 1031 purposes, but personal property for cost segregation studies. Thus, real estate owners can benefit from both the gain deferral under section 1031 for real estate exchanges and the enhanced cost recovery deductions of the cost segregation study.

In other words, you can have your cake, and eat it too!

A Few Considerations

Obviously, before embarking on these strategies, property owners need to consider a few factors.

First, will cost segregation be beneficial for the property you own? Borelli Investment Company performs cost segregation studies on each of the business condominiums it offers at its hot-selling complexes, such as AirTech Office Condominiums, Junction Office Center and Ringwood Business Center. Owners are, of course, advised to consult with their CPAs and are free to arrange for their own engineering studies if they wish.

Second, as a property owner, you should consult with your CPA about the impact of depreciation recapture in the future as a result of the cost segregation study, should you later dispose of the property through a 1031 exchange.

Regardless of some of the future risks, cost segregation offers such significant present value benefits through accelerated depreciation that the advantages often outweigh any potential disadvantages should a 1031 exchange later take place.

The bottom line is that relying on the two methods, buyers of Borelli Investment Company’s condominiums and other real property have tremendous potential to defer income taxes to future periods and improve their cash flow in the present.

For more information about cost segregation and 1031 exchanges, contact Borelli Investment Company at www.borelli.com, or call (408) 453-4700.

North San Jose’s Future is Looking Up

Vision North San Jose plan approved by the San Jose City Council in June 2005 provides the blueprint for a new land use policy along area transportation corridors that will see future growth go up, not out.

Driving up North First Street and into the surrounding industrial areas is like taking a trip back in time. Suddenly, it’s the 1970s. The semiconductor industry is skyrocketing. Dozens of related high technology businesses are being started each year. And these infant companies need millions of square feet of research and development and light manufacturing space here in Silicon Valley.

North First Street’s Golden Triangle — the area bounded by I-880 and Hwys 101 and 237 — is home to many of these companies. These are the buildings that surround you on your trip through time: one- and two-story dinosaurs from a different era, built for vastly different purposes than are required today.

You blink, and you’re back in the 21st century. Manufacturing has moved overseas. The imagination and brain power is still here, but the needs for office and commercial space to support these employees are radically different from what they were from the late 1960s into the 1980s — during the valley’s heyday.

City of San Jose officials have created a vision for the future that takes into account the changing business environment, transportation picture, and lifestyle trends impacting the valley today. Vision North San Jose represents meticulous research and a significant amount of discussion on the part of the San Jose Redevelopment Agency, Office of Economic Development, city planning department, council members, developers, industry executives, and residents. The plan is the first update in land use policy for the North San Jose area since 1988.

“This is a sea change in land use planning,” says Ralph Borelli, CEO of Borelli Investment Company. “The city has devised a framework for smart growth over the next 25 years. The area is going to be urbanized, with midrise and highrise office and residential buildings clustered along transportation corridors, replacing the aging industrial parks that are there now.”

High-Density, Industry-Centered, Urban Village

At the core of San Jose’s vision is a mosaic that brings together office, retail, and residential space into a high-density urban village. The plan incorporates:

• 26.7 million square feet of new office and R&D space
• 32,000 new high-density residential and single-family homes in close proximity to jobs
• 1.7 million square feet of supporting retail space
• $520 million in transportation improvements
• Parks and open spaces, public safety services, educational facilities

Borelli Investment Company Wins “Land Deal of the Year” Award

Borelli cited for major transactions in Milpitas and San Jose in
San Jose Business Journal’s Structures supplement

San Jose, California, December 13, 2005 — Coming off a year in which Ralph Borelli and Borelli Investment Company handled seven land transactions worth $56 million to earn the Association of Silicon Valley Brokers (ASVB) Land Broker of the Year award, the question was: what would Borelli and his firm do for an encore?

• How about selling 50 acres of unused county land east of I-880 in Milpitas, in a transaction that will ultimately provide the county with an estimated $400 million from the sales proceeds and a long-term ground lease, and generate billions of dollars in tax revenue for the City of Milpitas?
• And how about the sale of the old Union Pacific maintenance yard off Williams Street near downtown San Jose, in a complex deal that involved a $7 million clean-up of the site to prepare it for the construction of a new home community?

Together, these transactions earned Borelli Investment Company the Land Deal of the Year award from the San Jose Business Journal, as announced recently in the newspaper’s Structures magazine supplement.  As complicated as the transactions sound, they are not out-of-the-ordinary for Borelli Investment Company. In fact, one of the hallmarks of a typical land deal for Ralph Borelli and the respected real estate firm that his father founded 50 years ago is that these transactions are often the kind that other brokers hesitate to take on.  Ralph is one of the few land brokers who has the experience and creativity to handle complex transactions that involve time-consuming entitlement work with city governments, or the ability to pull together multiple small pieces of land to create a larger parcel that makes sense for a developer.

“This is something that we’ve come to specialize in over time,” said Borelli, president and CEO of Borelli Investment Company. “ In Silicon Valley, there are very few large pieces of land that haven’t been developed yet. Most of the projects we handle involve in-fill locations, so we’ve gotten very good at those.”

Home Developments a Specialty  Borelli Investment Company handles the majority of its land transactions for large homebuilders such as KB Home and Toll Brothers.  The land deals that it brokers ultimately result in much-needed housing for residents in Silicon Valley and other parts of Northern California.

For example, in Milpitas, KB Home will build a community of approximately 800 single-family homes, townhomes, and condominiums on part of the property that was sold by Santa Clara County. The rest of the land will be leased to automobile dealerships. In downtown San Jose, the buyer was also KB Home, which will build 105 homes on the old Union Pacific Site.

But Borelli Investment Company doesn’t just broker land to residential builders. “We’ve put together transactions for shopping center developers, as well as traditional office and industrial development companies,” noted Borelli. “It’s simply that today, there is a tremendous demand for housing in Northern California, and the complexity of the deals—especially in Silicon Valley—plays to our strengths in repositioning property, obtaining government approvals, and working through complicated development issues.”

Borelli was presented the Land Deal of the Year award on October 27th in the rotunda of the new San Jose City Hall, at a dinner sponsored by the San Jose Business Journal and attended by hundreds of people from the real estate industry, who were there to honor the Structures winners. “This is quite an honor,” Borelli commented. “We look forward to continuing to work to put together these kinds of transactions for our clients as the opportunities arise.”

Borelli Investment Company is one of the oldest commercial real estate firms in the Santa Clara Valley. Celebrating its 50th anniversary in 2005, the company provides a full range of commercial real estate services—from development and construction management to land sales, consulting for sales and leasing, and property management services. More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting www.borelli.com.

Contact: Ralph Borelli, CEO Borelli Investment Company 1770 Technology Dr. San Jose, CA 95110 Ph: 408.453.4700 Fax: 408.453.4636 E-mail: ralph@borelli.com

http://www.borelli.com

Borelli Investment Company Completes Phase I of Junction Office Center

Prime Golden Triangle location and smaller office condominium sizes create
significant sales activity prior to Thursday’s official opening.

San Jose, Calif., November 14, 2005 — Borelli Investment Company has completed renovation and is reporting brisk sales activity at the first phase of Junction Office Center, a two-building, 77,000 square foot office condominium complex at 2051-2055 Junction Avenue near Charcot in San Jose.  With the complex’s official opening this Thursday, November 17th, the first of the two buildings (2051 Junction Avenue) already has 36 percent of the units in escrow or with offers pending.  Renovation of the second phase of the office condominium complex will begin immediately.

“More and more, owners of small to medium-sized business are discovering the tremendous advantages of owning their own business property,” said Ralph Borelli, president of Borelli Investment Company.  “Junction Office Center condominiums range in size from as small as 750 square feet to 3,000 square feet-putting them within the reach of virtually every business. With a range of tax benefits, accelerated depreciation through an accounting method called cost segregation, interest write-offs, and SBA financing that only requires ten percent down-a buyer or investor can conceivably get into his or her own space with very little after-tax expense.”

A New Vision for North San Jose

Located in the heart of the Golden Triangle—formed by the intersections of I-880, Hwy 101, and Hwy 237—Junction Office Center also gives buyers an entrée into an area likely to see increased activity due to San Jose’s Vision North San Jose plan. Vision North San Jose calls for a sweeping transformation of the North First Street transportation corridor and surrounding technology parks, creating a mosaic of new office and industrial, retail, and residential development.

The plan envisions an exciting, diverse urban village linked by existing and future mass transit, including:

• 26.7 million square feet of new office and R&D space
• 32,000 new high-density residential and single-family homes in close proximity to jobs
• 1.7 million square feet of supporting retail space
• $520 million in transportation improvements
• Parks and open spaces, public safety services, educational facilities

Junction Office Center is a short drive from Mineta San Jose International Airport, and offers easy access to I-880 and Hwy 101 to reduce employee commutes.  The complex provides ample parking, with a ratio of 5.3 cars-per-thousand square feet of space. On-site services include UPS, FedEx, and US Postal Service drop boxes, and a delicatessen planned for the office center.

“Junction Office Center’s location puts owners on the leading edge of the renewal planned for North San Jose,” Borelli explained. “Because office condominiums enable owners to enjoy potential long-term appreciation in value, this is an ideal opportunity.”

$15 Million Renovation

Junction Office Center is undergoing an extensive makeover, with Borelli Investment Company investing more than $15 million in the two two-story buildings set around an open courtyard. Exterior improvements include awning-covered entrances and extensive landscaping. Formal lobbies with polished granite floors and high ceilings add to the professional touches. The 52 individual suites in both phases will be fully carpeted with a complete coffee bar, have separately metered electrical, and offer T1 access for high-speed Internet and file exchange.

The buildings also include upgraded restrooms with showers, state-of-the-art water-source,  heat pump HVAC systems for superior heating and cooling; seismic improvements; faster elevators; and a new roof. In addition, a common conference room for the complex features Web-based videoconferencing, PowerPoint capabilities, audioconferencing, a state-of-the-art video system, and Web access.

“Business condominiums are one of the hottest trends in commercial real estate today,” noted Borelli. “As more owners discover business condominiums, the market is going to get even hotter. This is a great time to make a purchase before prices rise any further.”

For more information about Junction Office Center—including materials that illustrate the advantages of business property ownership and explain the benefits of cost segregation—business people should call Larry Bengiveno at Borelli Investment Company at (408) 453-4700, or e-mail larry@borelli.com. Businesses can also visit the web site at www.junctionofficecondos.com.

Contact: Ralph Borelli, CEO Borelli Investment Company 1770 Technology Dr. San Jose, CA 95110 Ph: 408.453.4700 Fax: 408.453.4636 E-mail: ralph@borelli.com

http://www.borelli.com