The 631,255 square foot office building located at 44 Montgomery Street in San Francisco has selected a buyer, the Boston-based Beacon Capital Partners. According to sources familiar with the details of the transaction, the purchase price is $473 million, or roughly $750 per square foot.
The Registry announced in January of 2017 that the building had been placed on the market and that the sellers had indicated the asking price would start at $400 million. The seller of the property in the State Teachers Retirement System of Ohio. The company that had been awarded the listing for the sale is the San Francisco office of Eastdil Secured.
44 Montgomery is a 43-story, Class ‘A’ office tower centrally located in the downtown San Francisco Central Business District, according to the building’s Web site. It was designed by renowned architect John Graham, who also designed the Seattle Space Needle, and built in 1966 as Wells Fargo Bank’s world headquarters and once the tallest building west of the Mississippi. Tenants include the U.S. Securities and Exchange Commission, Locke Lord and the regional office for Invest Northern Ireland.
Ohio STRS has owned the asset for some time. The pension fund had purchased the 42-story asset for $111 million in 1997, according to sources that track the sale of office buildings in San Francisco. The belief is that the property will need some renovation so additional capital will be needed to invest into the property beyond the purchase price by the new owner.
Ohio STRS has a fairly unique investment strategy for a public pension fund. The investor mostly looks to buy properties on a direct basis without the services of any real estate managers on a separate account basis.
The pension fund, according to its Web site, has four target markets on the West Coast. These are San Francisco, Seattle, Los Angeles and San Diego. Its investment focus is on the four main property types of office, industrial, retail apartments.