345 California in San Francisco Gets $150MM in Refinancing

345 California, Metropolis Investment Holdings, San Francisco, MassMutual Life Insurance Company, Cornerstone Real Estate Advisors, Texas Pacific Group

By Jon Peterson

Chicago-based Metropolis Investment Holdings has received $150 million worth of refinancing on the 600,000 square foot 345 California Center office building 345 California Street in San Francisco.

345-Calif-CenterThe financing on the property was provided by Hartford, Conn.-based Cornerstone Real Estate Advisors on behalf of MassMutual Life Insurance Company. A representative of Cornerstone declined to comment when contacted for this story.

The financing was arranged by JLL’s Capital Markets operation. “I think that this property is the perfect fit for the kind of financing that a life company is looking to provide. A very high quality asset in one of the strongest real estate markets in the country. There were several life companies that were interested in providing debt for the property,” said John Manning, a managing director for JLL. He was one of the people involved in the deal for JLL. The others were Keith Largay, managing director, Alex Witt, senior vice president, and Fiorentia Malko, vice president.

The loan that was provided was written on a very conservative basis in comparison to the potential value of the property. The loan by Mass Mutual amounts to around $250 per square foot. The value of the property today could be somewhere in the range of $750 to $800 per square foot, according to sources familiar with the building.

Metropolis is known as a real estate owner that holds on to properties for a long time. “This company looks to invest in very strong assets in a limited number of markets and holds on to them for a very long time. This investor buys real estate for its own family interests. Some of its other assets include the NBC Building in Chicago and the Pennzoil [Place] office buildings in Houston,” said Manning.

Metropolis has owned 345 California Center since 1999. The company acquired the asset for $333 per square foot or $198 million, according to sources familiar with the property. The asset was originally developed in 1986.

The property is considered a top10 building in the San Francisco office market and is now 97 percent occupied, according to real estate brokerage sources who have been following the property for a long time. The four biggest tenants are Texas Pacific Group with 119,000 square feet, Marsh Inc. at 90,054 square feet, Towers Watson at 60,939 square feet and Chevron at 51,054 square feet. The first three tenants make up for approximately 45 percent of the building and they have long-term leases. Very few leases are coming up for renewal in the next few years.

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