By Jon Peterson
Korea Asset Investment Management in a joint venture with Lincoln Property Company has closed on the purchase of the ground lease for 350 Rhode Island Street North in San Francisco. The price on the transaction is $118 million, according to sources aware that the transaction has been completed.
The land on the site was also sold in a separate transaction. This acquisition was for $64.5 million, and the land was purchased by iStar for its Safehold REIT, as confirmed by industry sources.
The previous owner of the fee simple interest in the property was Washington, D.C.-based PRP Real Estate Investment Management. It had acquired the asset for $134.2 million in 2019 from New York-based Clarion Partners.
The listing agent on the most recent sale was the San Francisco office of JLL. The lead person on the transaction was Adam Lasoff, a managing director with the firm. Others that participated in the sale were Rob Hielscher and Michael Leggett, both senior managing directors with the company. JLL declined to comment when contacted for this story.
“By structuring and executing a highly complex deal involving two separate negotiations and sales that were required to occur concurrently by December 31st of 2021, PRP was able to maximize the value of the asset through the bifurcation process at disposition. We are not aware of another owner that has successfully undertaken such a complicated effort at the sale of an asset,” stated Paul Dougherty, President of PRP in a statement. “JLL did a great job of holding this sale together though a very tough process”.
The investment in the property by Korea Asset Management will represent the firm’s initial real estate transaction on the West Coast. It previously had made an acquisition of an asset in Dallas, according to sources aware of the company’s activities in the United States.
350 Rhode Islands is a 127,100 square foot office building. Roughly 98 percent of the property is office space with two percent being retail. There was no vacancy in the asset when the property was put up for sale in October of last year.
The building was originally constructed in 2002. The anchor tenant in the property is The City & County of San Francisco, and the building was redeveloped in 2018 in preparation for its tenancy. Its current lease in the property covers 78 percent of the asset. This will be moved up to 98 percent by the end of 2024 on a must-take basis with approximately 12 years of lease term remaining. Another tenant in the property is Freeman XP, an event solutions firm.
The City & County of San Francisco has made an investment in the property beyond paying for its rent. This totals over $20 million to create a state-of-the-art headquarters facility. The office building was initially developed in 2002. The four-story property has access to 2.5 levels of parking below grade that is under separate ownership. It has bicycle parking and lockers, on-site emergency/backup generator and a Starkbucks café.
iStar is known as a national public REIT. The company has New York City as its headquarters with a regional office in Los Angeles, according to its website.