By Jon Peterson
Toronto-based Brookfield Asset Management has agreed to pay $245 million for the 420,000 square foot One Post Street office building in San Francisco, according to public documents. The deal has not closed yet. That would bring the effective per square foot price in the range between $583 and $595.
The seller of the property is the McKesson Corporation. The listing agent on the sale is JLL, which is working through its Capital Markets Group in San Francisco. JLL declined to comment when contacted for this story.
The property as it stands now is around 84 percent occupied. McKesson does plan to lease back the property to the buyer for the next 10 years, and the total amount of space would be around 200,00 square feet.
Brookfield Asset Management has multiple capital sources that it could place the property into once the transaction is completed. One of these is the Brookfield Premiere Property Fund. This commingled fund has an open-ended investment structure, which means that it is always open for new commitments from investors. The initial capital raise for the commingled fund was projected to be $900 million. One of the investors in this capital raised with a $50 million commitment was the Ohio Police & Fire Pension Fund.
This commingled fund looks to buy assets that show core-plus like features. The targeted net returns for investors are 9 percent to 11 percent. The fund looks to buy a mixture of office, industrial, retail and apartments in gateway cities in North America. This would include San Francisco, Seattle, New York City, Boston and Washington, D.C.