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12/16/16
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In a major San Francisco office investment deal, American Realty Advisors has purchased Foundry Square III, a Class A, 291k sf trophy office asset located in the heart of the city’s highly sought-after and amenity-rich Transbay District. ARA has acquired the property on behalf of one of its open-end commingled real estate funds. The seller, a development joint venture between Tishman Speyer and institutional investors advised by J.P. Morgan Asset Management, completed the building in 2014.
Although a sales price was not given out, industry pros we talked to estimate a gross price of around $350 mil, which divides out to a record $1,200/sf. From what we understand, the net deal is probably closer to $340 mil. Still, a nice payday for Tishman Speyer and JP Morgan, whose land and development costs for the one-year-old project were around $170 mil.
Located one block from San Francisco’s $4.5 bil Transbay Transit Center, Foundry Square III is at the intersection of the South Financial and SOMA submarkets and is surrounded by premier technology, financial, legal and consumer goods companies. The area is in immediate proximity to a number of public transit options and neighborhood amenities.
The LEED Certified-Gold asset consists of a single 10-story office building that includes ground floor retail space. Foundry Square III, built in 2014, is 100% leased to high quality tenants including IBM, NASDAQ, Perkins Coie, Neustar, and Silicon Valley Bank. The property features state-of-the-art building systems, floor to ceiling glass, abundant building amenities including an open air sky deck, large efficient floor plates and a two-story lobby with a unique living wall.
Drew Hess, Senior Director, Investment Group, American Realty Advisors, notes, “acquiring a recently completed high-quality asset with long-term leases in-place to creditworthy tenants at First and Howard streets is the ultimate core investment. We see San Francisco continuing to lead global innovation with this location as the epicenter.”
The seller was represented in the transaction by Jeffrey Weber and Stephen Van Dusen of Eastdil Secured.
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