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Bentall Kennedy Places 600 California in San Francisco Under Contract

Posted on November 4, 2014 by publisher in CommercialFinanceINDUSTRY news

By Jon Peterson

Seattle-based Bentall Kennedy has put under contract the purchase of the 358,590 square foot 600 California Street office building in San Francisco for around $600 per square foot or $215.1 million, according to sources aware of the transaction.

Bentall Kennedy has not responded to phone calls and e-mails seeking comment for this story.

The seller of the property is New York City-based Clarion Partners. The Los Angeles office of the real estate manager also declined to comment when contacted for this article.

The property is being sold as an off-market deal, and the transaction between the two parties has not yet closed.

This deal will earn Clarion a significant profit on the sale should the current pricing hold. The real estate manager had acquired the property for $180 million or $502 per square foot in July of 2012. This situation is considered a short-term hold according to industrial standards. Most institutional investors hold on to properties for a three- to seven-year time period.

600 California is a 358,590 square foot office building. The 22-story property was initially developed in 1992 and completed in 1994.

The property is located within the North Financial District sub-market of the San Francisco office market. The sale of 600 California will be the second major office building in the sub-market to be near a sale. The Rockpoint Group is in the process of paying $650 per square foot or $307 million for 275 Battery Street.

The North Financial District area is the largest sub-market for office buildings in San Francisco, according to the 3rd quarter research & forecast report prepared by the San Francisco office of Colliers International. Its 116 buildings and 28.4 million square feet of space account for 28.4 percent of all the office space in San Francisco.

This submarket remains very tight. Colliers stated in its report that the vacancy was at 7.9 percent and was unchanged from the second to the third quarter.



UC Regents Plans to Buy 1111 Broadway in Oakland for Approximately $215MM

Posted on November 17, 2014 by publisher in CommercialFinanceINDUSTRY news

By Jon Peterson


The Office of the University of California Regents is planning to pay approximately $380 per square foot or $215.1 million to acquire the 566,168 square foot 1111 Broadway office building in downtown Oakland, according to sources familiar with the property.

A representative of the office of the chief investment officer for the UC Regents did respond in an e-mail that the university hopes to acquire the property and that the deal has not closed yet. The email stated that the buyer was not in a position to discuss any pricing details.

This sale would result in a big profit for San Francisco-based Ellis Partners. Ellis, with the help of a financial partner, had acquired the property for $158 million or $279 per square foot in November of 2013. Jim Ellis, managing principal with Ellis Partners, declined to comment in an email when contacted for this story.

The UC Regents sees 1111 Broadway as a core asset. The potential buyer stated in an e-mail that it considers the property to be a core asset due to its proximity to the core of downtown Oakland, giving it exceptional conveniences to restaurants, retail and hotel amenities, as well as outstanding accessibility to BART, multiple bus lines and highways 980 and 880. Over the years of various ownerships, the building has been maintained to the highest institutional standards and has historically commanded the highest rents in its submarket.

The UC Regents believes in the Oakland office building market. It stated in an e-mail that Oakland as a city is poised for significant near term rent growth and strong absorption if the city continues to thrive and drive economic expansion.

1111 Broadway, which was first developed in 1990, is now 96 percent leased. Major tenants in the property include Wendell, Rosen, Black & Dean, GT Nexus and FEMA. The University of California also occupies a floor in the building. The asset is a LEED certified gold office tower.

This property could become part of UC Regents existing real estate portfolio now valued at $3.5 billion, according to an e-mail from the investor. This portfolio includes a mixture of core, value-add and opportunistic private real estate it has invested in the United States and around the world.

These investments are placed into a mixture of commingled funds and separate account investment strategies. The UC Regents manages a total investment portfolio value at around $91 billion. This includes retirement, endowment, working capital and defined contribution pension plans.



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