By Jon Peterson
Turkish Polidev Investments has made the decision to place on the market for sale the 145,303 square foot, historic 351 California Street office building located in San Francisco’s Financial District. The pricing guidance on this property will be at least $120 million, or roughly $825 per square foot based on that pricing, according to sources that track the sale of office buildings in San Francisco.
The seller has hired the San Francisco office of CBRE as the listing agent on the sale. The team involved in the sale includes Michael Taquino, Kyle Kovac, Russell Ingrum and Dave Terzolo. CBRE declined to comment when contacted for this story.
Polidev has owned 351 California since June of 2010. The real estate investment firm had paid $35 million for the property at that time. Since the acquisition, the owner also invested around $8 million renovating the property, which began in 2010 also adding in the process a significant seismic retrofit that was completed in 2015.
The office building has strong in-place cash flow with the opportunity to add additional income in the near future. The asset is now 91 percent leased to a total of 30 tenants. The businesses in the property now include technology, legal, professional and financial services.
The in-place rents in the property are now in the range of 36 percent below market leasing rates. This, combined with the fact of 54 percent of the existing tenants have expiring leases by the end of next year, will give the new owner a possibility to add some value to the building in the near term. Another factor for value creation is through the transformation of eight existing multi-tenant floors to more efficient single or dual-tenant configurations.
Polidev’s acquisition of 351 California was its initial entry into the San Francisco office market at the time it acquired the asset at 351 California Street. It has since added another asset to its ownership. In 2014, the company paid $22.3 million to acquire the property at 322 Pine in San Francisco. The investor sold this property in July of 2018 for $38 million to a ventured owned by Lincoln Property Company and Rockwood Capital.