Beacon Capital Buys 655 Montgomery in San Francisco for $191.5MM

655 Montgomery Beacon Capital Partners CalSTRS California State Teachers Retirement System Black Creek Group San Francisco Eastdil Secured REIT WeWork

By Jon Peterson

Boston-based Beacon Capital Partners and California State Teachers Retirement System (CalSTRS) has acquired the office building located at 655 Montgomery Street for $191.5 million, or roughly $728 per square foot, according to a public document. Beacon declined to comment when contacted for this story. The pension fund did confirm the purchase but had no other comment to make at this time.

The seller of the property is Denver-based Black Creek Group. A company representative declined to comment in an email for this property sale. The asset was sold as an off-market deal with the San Francisco office of Eastdil Secured involved in the sales process as the broker on the transaction.

Black Creek had owned the property through a subsidiary known as Black Creek Diversified Property Fund, according to an SEC filing. This was a public REIT that in the past had gone by the name of Dividend Capital Diversified Property Fund. This entity had owned the property since November 2013 when it had paid $109.7 million for the building, according to public records.

655 Montgomery is a 21-story office building that totals roughly 263,000 square feet. Through the end of last year, the property was 89.1 percent leased with a weighted-average remaining lease term of approximately 6.1 years based on annualized base rent. Some of the tenants in the property include WeWork, Telmate and Redfin Corp.

There was some debt issued on the property. As of December 2018, the mortgage note and mezzanine loan had an aggregate outstanding principal balance of around $98.6 million with a weighted-average interest rate of 5.25 percent, and both were set to mature in September 2020.

The sale is one of two significant office buildings in San Francisco on Montgomery Street that have been placed on the market for sale. Earlier this year, the 75,880 square foot One Montgomery Building was put up for sale by New York City-based 601W Companies. A potential sales price was pegged to be around $90 million. No deal has been struck with a buyer yet.

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